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Capitalism Socialism etc - unload here

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[Forked off from BMTC thread. Moderation takes time, so do be considerate and create new threads for off-topic stuff. Like you'll all listen, but still :) - Moderator]

SB, Thanks for bring the focus back on the crux of the matter. To me this thread is about how to better the system, as are most of the threads, but we just don't seem to get away from bombastic phrases and rhetoric which blindly support privatisation as 'the' cure and socialist incling as the worst ill. As this is a public forum, I hate to think of the impact it will have on the reader passing by if some tangential, irrelevant and out of context  statements which do not represent reality were left unchallenged. Air India example is so useless for this debate - for goodness sake, look around and there are heaps of big and small private airways in trouble. Not once have those who support models with socialist tinge suggested there is not a problem in their current avtar, nor has anyone said there is no need for improving - if anything we are open and accept there are problems unlike this blind love for privatisation as answer to all ills when examples of poor accountablity / corruption / poor service in privatised sector abound around us (I mean the reference to private postal service in India - frankly its unregulated, disorganised and pathetic compared to Govt post - we are just too lazy to go to the post office and want someone to come pick the post from our doorstep). Please take this debate to another thread if it helps satisfy the need to deny reality around privatisation.

Further, every sector privatised in India, there have been pushes and pulls from private players who have great influence within the Govt / ruling politicians. How come they manage to get all over the place when it comes to building a sea link or a metro? Let us talk privatisation using TVS or Tata or someone else if they show any incling to being part of this business where clearly the returns are not as high or risks big. Why would Tata get involved in public transport which affects sales of Nano? Is there any player identified, if not its pointless waste of our energy which can be invested in improving the current system.

BEST or London or where ever, there are bound to be sour grapes. Considering the amount of corruption the average BEST passenger mat be exposed or participating in, the BEST manages fairly high standards on this one. BEST already is expanding its useage of smart cards, they now have one which can be used on central railway as well and soon WR will become compliant with this.

Yet, to minimise loss, random ticket checking is required (BEST also uses plain clothes checkers). If we try and hypothetically agree that like London, Indian cities target 1% of all bus users, how many TCs do we need. If one checks 2-4 tickets a miinute but needs to spend 30 minutes on average getting the culprits to pay fine and do paperwork relating to it - how many passengers will one TC manage to screen per day per shift, how many are needed in BMTC to get there?

ASJ

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idontspam's picture

Learn from failures

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I think people have dropped from mars to believe they can run a pluralistic democracy of a billion people like a personal kingdom. The only socialism that is even possible to have without causing a breakdown of the economic system is a social security system. Everything else is a hogwash resulting in pilferage, corruption and proliferation of unionised extortion. To think that we are some great country where communist style equality will succeed is to think that soviet russia was a huge success to be celebrated.  All these castles in the air are because we are a unitary state. I think it is best we convert this nation to a federation so we dont have people living the past trying to save humanity by having govt make soaps and incandescent bulbs for the poor and needy; or airlines, as if that were a real social requirement.

murali772's picture

those were the days, my

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those were the days, my friend - - -

Muralidhar Rao
Muralidhar Rao
s_yajaman's picture

Capitalism...

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IDS, Murali-sir,

Please take time to read the following links as you consider capitalism the next best thing after sliced bread :).  What I read from your posts is that if only the government got out of the way and we let all these noble capitalists in we would be living in the tropical version of the US or Europe.

http://www.guardian.co.uk/environment/2006/feb/02/energy.comment

http://www.chrismartenson.com/crashcourse

One could argue that because we have not valued either fossil fuels or the environment fairly (a free market failure) , we have wasted precious limited resources on completely idiotic consumerism which we consider to be the good life that should be on offer to anyone who can afford it. 

Capitalism thus far has proved to be the winner because we could both find cheap energy and burn it easily without bothering about the environment.   Both assumptions are going to be increasingly challenged in the next decade. 

As for "those were the days", can any Bangalorean actually say honestly that the quality of life in this city has improved in the last 20 years?  yes we get mobile phone connections, choice of cars, 150 flights a day, etc etc.  And if we continue down this path what will be the fate of our children?  Capitalism does not put any value on sustainability.

Srivathsa

Drive safe.  It is not just the car maker which can recall its product.

Drive safe.  It is not just the car maker which can recall its product.

idontspam's picture

Laissez faire is not the same

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Capitalism does not put any value on sustainability.

That is because it is now laissez faire. Especially in our country, where personal good rules over common good and private means personal. Govt can control what, where, when and how private players can participate, but admit the fact that govt dole makes a society dependent and treated as only consumers of whatever is doled out. Treat society as creators and make them producers and hence job creators. When there is choice the creators will multiply. Poverty will never be eliminated by dole. Naxals will never come into the mainstream because the govt promised jobs. Strong regulation is required to ensure success and this is where the govt should focus. Enable people to start businesses and support through regulation.

The lesson from the Financial meltdown was not that capitalism had failed but that regulation had not kept pace with the market.

The US govt slept on the job. Not for a moment has there been a thought that the US govt employ stock brokers to run the stock market or employ bankers to provide housing loans. In fact if you go deeper people will blame the govt for keeping interest rates artifically low instead of letting the market decide the rate which would have been a lot higher.

Look at the sucess of the NHDP. It is PPP all the way through. It has created an ecosystem of road builders and provided capacity for the future. You get better prices through bids. NHAI has finetuned their contract management and are still getting better. Does this mean there are no loopholes? NO. Does this mean this is perfect? NO. But did we think PWD should have done it? I am sure everyone will agree where that would have gotten us. A bloated organization with millions of people like the railways who wont have the knowledge and will build roads like BBMP builds for us with their 2 bit contractors and bad regulation.

psaram42's picture

Socialism and capitalism

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 Socialism and capitalism are the two faces of the economic ideology coin. There could be many aberrations of these two basic ideologies. Capitalism existed for long before Adam Smith wrote in 1776 his book "The Wealth of Nations". The foundation of Capitalism is in government’s non interference in the economy, there by encouraging competition. Healthy competition depends on demand and supply principle. Socialism on the other hand favors cooperation. 

The merits of competition are undisputable and so are the compulsions of cooperation. You can play with the ice-cream when the food on the table is plenty. When more mouths have to be fed sharing is joy. When the food on the table is far too short survival of the fittest or Leissez faire comes in to fore which is off topic. Oops! 

Read and take a quiz on Socialism and capitalism

asj's picture

Well said

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PSA, well said and well put. How exactly some come to think of Indian railways, BEST, IIT, IIM, dozens of medical teaching institutes offering world class education as hog wash and not a reality - I would never understand.

Needless to say, those who use diversion, rhetoric rather than facts will bring communism in to this. Like telling us to believe that capitalist forces and not the oppressed poor were reason for revolts in Europe which gave rise to free democracy we will now be told to believe socialism and communism are same.

ASJ

nl.srinivas's picture

Only questions remain

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With profit making the only goal and such a huge population of which most part is illiterate and those who are decently educated cannot be protected by law how do you expect capitalism to succeed in india?

With leaders who put their interests first and deliberately keep most of the population poor and under-developed how do you expect socialism to succeed?

 



s_yajaman's picture

government owns capital to capital owns govt

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Maybe we are destined to live between two extremes - government owning/controlling capitalism or the other way around.  Witness what happens in Bellary with the mining lobby or even with GW Bush.  Money buys political power which in turn enables even more deregulation and enables the elite to make even more money.  Democracy then becomes of the elite, by the elite and for the elite.

Henry Paulson who before his role as Treasury Secretary was the big boss of Goldman Sachs and lobbied and lobbied to get the Glass Steagal act revoked. 

Srivathsa

 

Drive safe.  It is not just the car maker which can recall its product.

murali772's picture

my compulsion too

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I hate to think of the impact it will have on the reader passing by if some tangential, irrelevant and out of context  statements which do not represent reality were left unchallenged

Indeed, that's my compulsion too.

blind love for privatisation as answer to all ills

It's nobody's case that privatisation is the panacea to all of the country's problems. There will continue to be problems. But, like the late Sri C Subramaniam had once stated, atleast these will be new problems, and not the same old ones for which we have not been able to find solutions for over half a century.

There never was and there never can be bigger Socialists (in its true spirit) than Dr Ambedkar, Nehru, etc, the founding fathers of the Indian constitution. However, they
themselves opted out of listing the word 'Socialism' under the 'directive principles' of the Constitution. It was not an oversight, it was deliberate; since they had very clearly foreseen how it could be misused.

And, the irony of it all is Nehru's own daughter, using emergency powers, brought about the amendment to the Constitution to include the S-word in the directive principles, in order to pursue her own nefarious agenda, justifying it with her infamous quote 'corruption is a global phenomenon'. This is the legacy we are now having difficulty living down.

Air India example is so useless for this debate - for goodness sake, look around and there are heaps of big and small private airways in trouble.

As far as my understanding goes, atleast GOAIR, PARAMOUNT, SPICEJET in India seem to be doing fairly well, and also expanding operations.

I mean the reference to private postal service in India - frankly its unregulated, disorganised and pathetic compared to Govt post - we are just too lazy to go to the post office and want someone to come pick the post from our doorstep

There's no private postal service in India. There used to be the Angadia service amongst the business community earlier. But, I don't know if it still exists. But, the private courier companies are very efficient, reliable and charge a moderate price for the service rendered.

Let us talk privatisation using TVS or Tata or someone else if they show any incling to being part of this business where clearly the returns are not as high or risks big

As I have stated before, the most important question today is how urgent is the need for efficient public transport services. In my opinion, we can't wait even a day longer. If you accept that, can we then afford to wait in eternity for the BMTC to get its act together, with or without the help of a Prof Ashwin Mahesh? No - we have to bring in the TVS's and TATA's today. And, when approached that way, the route becomes very clear.

Because of the prevailing 'license-permit raaj', so far, it's been only the Blue-line (of Delhi) kind of operators that have generally been in the picture, in turn earning the
private sector a bad name. For that to change, the raaj has to be dismantled and the entry of reputed players like TVS facilitated, all under the oversight of a duly constituted
and empowered regulatory body.

And, the TATA's and TVS's are also equally desperately looking for avenues for growth, particularly with the conventional ones based largely on exports, becoming less and less attractive or even closed.

So, it's a win-win for everyone involved, particularly the aam aadmi.

This is also the case with Our other infrastructure service sectors (power distribution, water supply, railway operations).  

BEST manages fairly high standards

May be. But, BEST ran up deficits of Rs 221 cr in power supply, and Rs 372 cr in bus services, in '08 (It manages with Maharashtra government grants). As compared to that, in adjoining Central and North Mumbai, Reliance supplies power equally or more reliably, at the same tariffs as fixed by MERC, and makes fair profits. How long can the Maharashtra government continue subsidising the BEST operations, particularly when the contrast is so stark?

Well, apart from Mumbai, the cities/ areas that 'enjoy' power supply from private companies are Ahmedabad, Surat, Kolkata, Greater Noida, and in all these places, the customer satisfaction and profitability levels are far higher than elsewhere where the supplies are with government companies/ agencies, all being subject to uniform regulation by the respective SERC's. Delhi will be joining them soon.

Muralidhar Rao



 

Muralidhar Rao
murali772's picture

wrong focus

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can any Bangalorean actually say honestly that the quality of life in this city has improved in the last 20 years?

If there's been a lowering of the quality of life, it's largely because of the state's and its agencies' failures, more specifically in its key role as the regulator, instead of concentrating on which, it has been messing around with the services and manufacturing sectors.

When Socialism rules, you have to content with the mafia's; when Capitalism rules, you have to content with lobbies. Mafia's don't play by rules. Lobbies generally play by
rules, but after using their clout to re-write them to suit their designs. I would like to believe that the Indian democracy is sufficiently deep-rooted to manage lobbies better
than mafia's.

And, what I (and perhaps IDS also) am rooting for is not hard-core Capitalism of the US Conservative party kind, but a version more in line with the Democrats and British Labour party (I am actually not too sure of my grounds here), where the government's role as the facilitator and regulator is paramount. But, when it becomes a player, in addition, its key role as the regulator gets compromised, as we have been seeing time and again.   

 

Muralidhar Rao
idontspam's picture

Monetary policy consequences

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 lobbied to get the Glass Steagal act revoked

This is one of the the symptoms of the monetary system post Bretton Woods collapse. I have always supported going back to a representative monetary system with gold standard or to any other standard the experts can come up with. Hyperinflation due to fiat money is not an indicator of the health of private participation in public initiatives to improve quality of life, it is instead the indication of a flawed monetary policy under any ideology. Scandinavian countries with socialist leanings were one of the first to get off the gold standard and into fiat money to save themselves from depression.

kbsyed61's picture

Time to dismantle BDA?

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IDS, Murali Sir,

http://www.deccanherald.com/content/13701/five-layouts-over-16-lakh.html

Either we are half sighted or its case of being hypocritical on issues that directly effects. For low cost and top class education we need more IITs, IIMs, for house sites we need BDA's, DDA's, we have no qualm accepting these from govt run institutions.

This issue was raised on many threads and occasions, sorry to say that not one response was seen. the question I am raising is why should govt be in business of running agencies like BDA, DDA, which we all know the den of all corruptions in B'lore and Delhi? But none dare to question its existence. Even the governance vision brought about by ABIDe also conveniently ignores this issue. The reason being, majority of MLAs, MLCs, official and I am sure this is the case with ABIDe also, owns prime BDA lands.

If privatization of BMTC is the solution for better urban transportation in B'lore, certainly dismantling BDA is the solution for the ordinary souls to own a house at reasonable market price? We go all the way to suggest privatization for BMTC, but we have no words or suggestion for BDA? Is it because existence of BDA suits us?

idontspam's picture

Privatization is not private participation

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 If privatization of BMTC is the solution for better urban transportation in B'lore

Private participation in running buses for Bangalore may or may not mean Privatization of BMTC. Who will regulate the private parties and manage them? If it is going to be BMTC then they need to become a regulatory authority like TRAI or SEBI and only handle regulation. They cannot compete in running buses and still be the regulator. It will then become like Air India being the regulator for the Indian skies instead of DGCA. 

but we have no words or suggestion for BDA?

Try to apply the analogy above for BDA and you will get your answer. Who is regulating the real estate in India? Who is responsible for cleaning up entitlements and land titles and allocations and match them up with master plans? How many agencies do we have for land related functions? What is the coordination between the sub-registrar and BDA?

The sector is in such a mess because instead of being a regulator BDA is busy allocating sites and has left the sector to the whims and fancies of ministers who are only representatives and not regulators. If there was a regulator not only will real estate not be lassiez faire anarchy but it would mandatorily have different classes of housing in the product mix. BDA have not yet discharged a strong regulatry function. Instead they are entrusted with building ring roads because BBMP has too much on its hands or it is not trusted to deliver.

Vasanthkumar Mysoremath's picture

Socialism cares for all whereas capitalism cares for a few

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Very interesting debate. Keep it up.

My take: Why can't we have social capitalism?

Socialists believe that everyone is entitled some part of good life in this world. If a person is skillful then he is paid accordingly. Sociaism ensures that education plays an important role to help people to get employment and employees to reach these skills of high level.

Socially governed society ensures that in case a capitalist ditches and willfully defaults in repayment of huge loans and escapes, workers will be able to run  an industry that has given them their daily bread.  This will be ensuring by teaching them  the skills to make good economic plans, take over the running of the industry in an equitable and profitable manner by providing Social ownership.  It also means that working people run, operate, control, manage, and own all of this property so that class action of social governance is ensured.

Socialistic pattern of society ensures that holistic laws are made to protect all class of people from hunger, poverty, workers from low wages, poor working conditions, and other types of exploitation by the capitalists.

Whereas, capitalism ensures that there is a closed user group control mechanism in place and come what may, they will not let down their bottom lines to become red.

Any society that swears by humanitarian considerations, ensures that  discriminations due to sex, race, color, or religion are at the minimum of the scale of governance.   Therefore, capitalistic social responsibility (CSR) is enacted as a tool to enjoy the double benefits of having the cake and eating it too - tax concessions, dikhawaa social enactments.

- Can we have Social Capitalism in place? This way, we can share the world without double whammys.

- Vasanth Mysoremath

silkboard's picture

a quote, and the IIT thing

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Feel like putting up an old quote (ingore the sustainable transport angle of attack for now)

  • Communists - bicycles for all, mercedes for one
  • Socialists - scooters for all, bicycles for some
  • Capitalists - mercedes for all, nothing else for none

I am trying to keep out of this thread, but I will say this for IITs being mentioned by a few as the shining beacons for socialism and what not.

It bothers me that some people take pride in having institutions in this country that take care of mere 1-2% of the demand that exists for them, and that too in a critical social sector (quality secondary education). Those who work in the IT sector know that the real strength of IT industry in the country is "quantity", and not "quality". And whether we like it or not, that "quantity" comes from those unknown or private engineering colleges operated by the netas and what-nots that are often made fun of relative to the IITs.

I only imagine where would we be in IT industry today if we had quality on top of the good quantity. Or may be, a little less quantity, and little more quality.

This is not to attack the IITs by themselves, each one of them is a fine institution by itself. But quoting them as "successful" example of socialism is like saying "hey, every citizen in my state lives life king size", and then producing the king himself as the example.

asj's picture

Let's get this in to perspective

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The whole debate started only to set the balance right as it seemed that thread after thread we had only one solution to all ills - privatisation. There have been sweeping comments made, generalisations made with little inside knowledge on the healthcare thread and elsewhere with repeated suggestion that private players are more competent, not corrupt  and more ethical while suggesting that every public funded venture is in shambles.

It is in the light of the above that I felt it was needed to point to agencies such as ISRO, BARC, AIIMS, IITs, IIMs.

SB, the question I ask those in power for 60 years is - what stopped us from making more of these Institutes? Why did it take a side issue of reservation in IIT to be a catalyst for commissioning more seats and more IITs?

Private education is welcome when governments have failed to act on their duties, this is not any different from Bisleri water susbtituting for lack of clean drinking water in much of India.

Now who owns and runs these educational hubs of new India, with what vision? How true is it that these places that churn out graduates do so in enough numbers? NASCOM has been on record that we will fall short of supplies.

I worry more when we start to think a lot is being done by simply doing more of what we do to reach 8% growth. To become a true power, we will need to move from simply providing semi-skilled labour on cheap to Western democracies to actually taking bulk of the share of new registered patents - the real shift will come when this happens - for this we need Institutes that offer quality education.

Passing references are made - Manipal medical college has great reputation, but out of many dozens of private medical colleges which are no more than money making rackets, we have one example of success.

Then we have quotes and rhetoric which is meaningless - what should we make of Capitalists - mercedes for all, nothing else for none - is this true, if so USA would not have 30% of its population unable to buy medical insurance.

Again, I do not really care if there are private players offering postal service, but it is outlandish to suggest this is needed because the govt postal service is uselss. I send many letters to India and they all reach in time, the driver education DVD gets requested from Kanya-Kumari to Kashmir, often, the only service that caters some remote areas is the Govt postal service - and I have never been let down.

Murli sir, why is there a problem if BEST buses are subsidised (and we will see if this is true) if London buses are? How many transport anegnices worldwide cope without some form of subsidy? BEST is not given fuel at any lesser cost, they are not excluded from having to pay road tax, we now even know they are expected to pay Rs 3K per bus on sea link, where is the subsidy?

How do we make sense of buses in Mumbai making losses against the background of the fact that without BEST buses Mumbai will come to a standstill - is there any understanding of what this may mean to the economy?

Do we not know why power plants make losses in India - unmetered supply is common, not because the average worker in BEST is corrupt, they have no say in the way the nexus operates.

I have now for past 4 years repeatedly asked for MVA88 to be amended so that buses can run without conductors, are the authorities responding? Can BEST then be expected to slash overheads? This applies to BMTC as well.

SB and Murli should know that I have also writtne an outline skeletal draft on using the purchaser-provider model for reforming bus service in Pune, this is the first step before considering privatisation.

Again, I feel it is very inappropriate for the sake of making a case to come up with examples without any deeper thought - AI compared with low budget domestic airlines with handful of fleet size operating on only select routes. This is pointless as in an industry affected by global trends in fuel pricing to eoconomic realities of today, it is always the long haul operators who suffer more, its those with bigger fleet sizes that are at more risk - BA has negotiated 7000 staff to not take a salary. Have we forgotten the problems of Jet airways (the only private player from India with long haul flights).

Let me end by once again expressing my shock at sweeping rhetoric which is baseless - When Socialism rules, you have to content with the mafia's - since when did sociopaths have any underlying link with either socialism or capitalism. Lets not go OTT for sake of making a point.

And all the historic reference to Nehru et al - I firmly believe that this country has not seen the true spirit of social welfare, all we have had is 'corruption' and its not going to go away just through privatisation.

Do private courier services operate by law - do they contribute to welfare of their staff by way of PF, pension schemes and the rest? What moral and ethical standards are the biggest firms in India setting up when they happily seek multi-crop lands for their benefit disregarding food security for 1.5 billion people in the years to come just so that they are closer to highways, ports and airports (be it Nano, Reliance in Pen at Raigad and DOW like companies eyeing Chakhan near Pune) and thus actually not have to build these facilities themselves and yet get massive tax sops.  

At least its good to know there is now acknowledgement that we are not asking for hard core privatisation and that first effective regulation ought to be in place. This is paramount, whether its a public service or private. Success depends on good governance not whether its a public funded or privately funded model. And these are not the only models, let's not forget the cooperatives like Amul and the like.

ASJ

idontspam's picture

Not getting it

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 this is not any different from Bisleri water susbtituting for lack of clean drinking water in much of India

Again misleading apples to oranges comparision. Private bottled water is as opposed to govt bottling water themselves. Private parties participating in providing piped drinking water is as opposed to govt doing it themselves. 

I firmly believe that this country has not seen the true spirit of social welfare, all we have had is 'corruption' and its not going to go away just through privatisation.

Corruption is only going to increase by trusting the govt continuing to do more of the same. If this point is lost you can beat around this bush for time immemorial. We have had lokayukta around for ages.

It is easy to get hung up on the left unwilling to find middle ground which works for the nation. This is a disease only people from the left are unable to come out of. It shows up in the cause of the Naxals. 

I will try it one more time. The model of govt doing everything so that people get jobs is not scalable beyond a few lakhs. When we make private sector build the servicing capability and create the jobs we increase the competition. The govt can then utilize those skills to provide services to the rest of the people. A robust regulatory model is all we need. I provided the PWD example for NHAI and how it would have failed if it were attmepted by govt. There is the example of how govt did not keep cell phone to itself but instead invited private players to participate. Tons of working examples which can be replicated. Instead of fixing the non working examples we are going back to an essentially non-scalable model..

asj's picture

I will get it but only when I see it

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Bisleri was an anology not a comparison. I do not really care if Bisleri does well or not as long as all Indians get clean drinking water.

I am not against private players, what I disagree with is the suggestion that public services are uselss. I also disagree with the idea that privae players are better wih regards corruption, morality, ethics. They have a open agenda of making profits, period.

So, here is the deal, I will get it when private players create teaching schools for all rather than only the elite market. I will get it when they take water / electricity at affordable prices to remote India and not just urban India or build hospitals of same stature as they do in urban India in rural India. I will get it then.

http://www.stwr.org/land-energy-water/-implication-of-water-privatization-in-india.html

ASJ

Vasanthkumar Mysoremath's picture

Privatise Judiciary and Decentralise Corruption

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Luckily India has not reached the nadir of capitalism even though it is surviving as a nation with socialism awash with all the mediocrity because our Constitutional obligations of the political system ensures that we continue to lead a socialistic pattern of society.

ASJ's postal services example will be valid for another hundred years. Liberalisation of trade practices has enabled capital hooliganism affecting the most vulnerable sections of the society.  Such practices do have their advantages for a selected few to have a little Jam on their bread and butter.  Whereas socially responsible sectors, though incurring losses due to bad planning and execution are necessities in a democratic country like India. The Govt. allowed courriers and look at their plight.  How many have survived? 

But The Postman is surviving and rendering service to the remotest corner by running or riding horse/camel back or going up the mountainous areas by sweating.  How many private players would have embraced such onerous responsibility and care for the aam aadmi.

Telephone was a luxury - now it is available for the asking - how? By entry of liberalised players.  But with fast track innovative telecom fireworks, Government ensured a far sighted regulatory mechanism through TRAI while it played its own cards through its national BSNL network and volume. 

BSNL's ability to embrace technology and showcase its capacity for providing mobile services at reasonable rates forcing other players to fall in line is a class of social regulatory mechanism that can thrive under chaostic scenarios.  Otherwise, Rs.6 per minute call rates would have benefited the capitalist based telecom players with no end.  The rates would have gone up citing increase in operating costs etc.  But BSNL has done what an aam aadmi expects - it stepped in and said, "hey common man, your savior TRAI will take care of you".

Even though we have created a stratified society through liberalised trade/services sector practices, we should continue to have enough effective control mechanisms through proper governance of the system as enunciated by democratic principles for the sake of one person -

- THE COMMON MAN who is gasping for clean air, reasonable transport, minimum health care, healthy food and clean water as his minimum needs.

- The bottom line:  Let there be healthy competition between socialism and capitalism but with a sense of responsibility to the society we are living in and with a touch of humanity.  Socialism cannot make profit - it can at best be only = NO PROFIT NO LOSS = whereas capitalism ensures investments only if there is an element of PROFIT.

My constructive suggestions

(1) - To satiate a section of our Prajas hell bent on advocating watered down capitalism in India, try experimenting by PRIVATISING JUDICIARY AND GETTING FAST TRACK JUSTICE TO ALL SECTIONS OF THE PEOPLE - you will definitely go to Heaven because of blessings of those who are, for decades, waiting for myraid justice.

- This suggestion is a WIN WIN for all because there is lot of black and white money for both parties - the petitioner and the respondent. 

(2) - PRIVATISE/DECENTRALISE CORRUPTION - This is a two pronged beneficial suggestion - Decentralise the permit raj of socialism between ten inspectors - whoever quotes the lowest corruption rate, gets my nod to get me what I want by bending the rules in their red tape structured misuse of office. 

- Let us live and let live.  Because, we are wedded to socialism for life. Divorce and remarrying capitalism is a prolonged and painful experience. However, if we can encourage social capitalism, may be both will survive.

- Vasanthkumar Mysoremath

 

 

s_yajaman's picture

My two paise

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Some of my thoughts on this.

a.  Government needs to decide where it can make a difference and where it can only offer parity services.  former will include primary schools, village roads, rural healthcare, bus services to remote villages, connectivity to remote towns through low cost airlines, postal services fuel stations in remote areas.  List is indicative.  Latter will include mobile phones, flights to New York, car manufacturing, etc.  Railways - grey area for me.   For me there is a role for government outside regulation alone.  There are some places private players simply will not go to if there is no money to be made. 

b. Strong regulatory framework for all service lines.  However given my earlier caveat that political power can be easily be controlled by capital, all regulation will have weak spots.  Watch out sectors for regulatory illnesses will include SEZs, real estate, mining, public transport, water supply.  Equity, access and quality (to quote Kapil Sibal) are paramount.   In some cases how to protect the environment from over exploitation/abuse.  regulators should be as independent as possible.

c. About us picking berries.  We have a finite planet with finite resources.   Capitalism depends on vast amounts of energy - the origins of capitalism are linked with the invention of the steam engine (and hence textile factories, etc).  There is a very strong correlation between per capita electricity consumption and per capita GDP.  Same goes for oil usage. 

India today uses some 500-600 KWh per capita of electricity and 1 barrel of oil p.c. both for a GDP of about $1000 p.c.  If we have to hit $5000 which is the sort of level that Thailand and Malaysia are at (let alone US and Sweden), see for yourself how much coal and oil we have to burn each year.  We will need to burn some 2 billion tonnes more coal and guzzle 4 billion barrels more oil per year.  Where is going to come from in the light of our coal reserves and the fact that the world will hit peak oil somtime in 2008-2012.  What will this do to GHGs?  What will this to to our forests?

d. While this does not mean that governments should make and sell and distribute, it lays even more responsibility on them to ensure that we use our finite resources wisely rather than fall to capitalism's constant demand of ever increasing consumption.  Capitalism has to be reined in if our children are to have a semblance of a livable world.  We are living off them - and leaving big debts for them to repay.

Srivathsa

 

Drive safe.  It is not just the car maker which can recall its product.

idontspam's picture

Where is the middle ground?

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 I will get it when they take water / electricity at affordable prices to remote India and not just urban India or build hospitals of same stature as they do in urban India in rural India

This is a valid concern and the only way to do this is to first explore the best options to improve efficiency of services and then use govt as a fall back. I will tell you where the middle ground is. It is in not in kneeling to a bookish definition of capitalism but start with introducing private players for each service that the govt by default will provide.

 Believing private parties to do it by themselves or I run back to big brother govt is self defeating. You are basically not exerting any control over managing the situation you either throw it away to others for exploitation or want to do it yourself through a proxy called govt. This is no leadership or application of a god given matter called brain.

Ex. take cell phone service and universal service obligations that are placed on it. Look at the way circles with all kinds of demographics are carved out an awarded to private players. Be informed on the roadmap from vanilla to GPRS to 3G to 4G and how technology is upgraded via the regulator. Read about how the villages in India today have access to cell phones and not wired govt driven land line phone. 

asj's picture

Let's see how it all unfolds

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If only everything could be as simple as erecting wireless masts, every house would have water just as they have mobile phones.

Lets see some thought and plans emerge on Praja to regulate a private bus operator.

Lets see if the massive discounts of all kinds given to SEZs help the Nation or create modern avtar's of zamindars. May those who have hope in SEZ Act be correct, nothing I have read about it makes me feel comfortable, so, I hope I am allowed to wait and watch.

ASJ

idontspam's picture

Yes and No

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 There are some places private players simply will not go to if there is no money to be made. 

From cell phone services we know how the regions can be mixed into circles, opened to private parties and universal service obligations be enforced. How many people in rural see a class divide in cell phone services? All of them have the same rights to service level and accessibility as their counterparts in the cities. These are models worthy of emulation. Like I said application of mind and ability to try out scalable models are important not trying to fix more of the same.

Watch out sectors for regulatory illnesses will include SEZs, real estate, mining, public transport, water supply

All of the above dont have a regulator and are run by various boards and ministries of the govt. So let alone regulatory ilness there is NO regulator at all! its free for all in case of some. In case of others depends on the govt and the minister. In certain others others, unions living in a world of job gaurantees.

There is a very strong correlation between per capita electricity consumption and per capita GDP

Yes I am concerned too. We need to either find sources of energy or more berries :)

which is the sort of level that Thailand and Malaysia are at (let alone US and Sweden)

Unsolicited advise to me from a traveller in Europe: "It is not possible for India and China to match up to per capita levels in developing countries ever. There isnt enough resources on the planet to let you do that. You are just too many people". Nobody even thinks of Africa anyway. Its just a time bomb waiting to explode if we are all still around to see that day.

s_yajaman's picture

Rural mobile phone penetration

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IDS,

Rural mobile phone penetration is about 12% vs urban of close to 75%.http://thomaspmbarnett.com/weblog/2009/03/ One can hardly say that we have universal coverage. 

You have a valid point that we need to learn from working models (airlines, telecom)models before writing them off.  However nothing stops a private hospital or a private school from coming up today in rural India ?  Or is there? 

I frankly have no faith in the ability of our government to regulate anything that involves life and death.  Look at our licensing procedures, fitness certificates, polluting factories, smoking autos.  Greed on the part of capitalists and corruption on the part of the government make a deadly combination.  Letting this loose is like letting a bull into a china shop. 

Maladministration is in our genes I think

Srivathsa

 

Drive safe.  It is not just the car maker which can recall its product.

idontspam's picture

Coverage <> Penetration

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 Rural mobile phone penetration is about 12% vs urban of close to 75%. One can hardly say that we have universal coverage

100% coverage exists even where penetration is 12%.

srkulhalli's picture

Govt. as an employent agency

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One point that is not bought up is why the Public sector sometimes doesnt perform and private does. They are the same people, same Indians et al. Simply put, in private sector -

1.  You are accountable, have to show results

2.  Merit is valued, because of 1. If you dont do well you are fired

Get 1 and 2 in govt. sector and it will do equally well. The mindset today is govt. as a social security job, because you cannot be fired (practically). This ensures a minimum pay and then how you earn more is how innovative and corrput you are.

The social security aspect and the performance aspect needs to be seperated. That would do wonders. Since govt. job is actually far more critical, I always wondered why we have such a casual attitude on performance there.

Social security should be dealt with for all, not just govt. employees, as an unemployment allowance or something along what ASJ is putting together.

Suhas

psaram42's picture

People are same

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 True. However one has to understand why private enterprise is called an enterprise and not an undertaking, like public undertaking is called an undertaking when it is a monopoly? Enterprise is enterprise because of the risk involved. This risk is shared by many people by putting money and they end up being called stake holders. It is but natural that the entrepreneur is an entrepreneur to maximize his returns. This is justified because of the inherent risk he takes of loosing the capital. 

People are people because they are ordinary. They can be good or bad though. Hence we can come to the conclusion that the success/good name of an enterprise depends on the people being good or bad not on the ideology. 

murali772's picture

can't be met through mastercard

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Yajamaanre'

Your 'two paisa' cannot be met through MASTERCARD, that's how invaluable I would consider it. Yes, what is required is strong regulation, and specifically to rein in unbridled Capitalism. There certainly are the hazards. But, I would rather choose to repose my faith in Indian democracy and the basic goodness in the human being and face up to the hazards, than go back to the mai-baap sarkar that Doc ASJ is advocating.
    
There are some places private players simply will not go to if there is no money to be made.

Exactly! Today, TVS or TATA's will not touch public bus transport services because of the prevailing license-permit raaj. As I have stated before, the most important question before us is how urgent is the need for efficient public transport services. In my opinion, we can't wait even a day longer. If you accept that, we have to bring in the TVS's and TATA's, and now. When approached that way, the route becomes very clear. The raaj has to be dismantled, and the entry of TVS and TATA's 'facilitated'. And, that should be the role of the government as the regulator - faciltation through reduction of road taxes; priority for movement, particularly during peak hours; congestion tax on private vehicles, etc, etc, - we know it all. And, then why won't the the TVS's and TATA's come?

Apart from the traditional players, like the Kolkata Goenka's, none of the regular Corporate players were initially prepared to take over power distribution from where the 'government boards' were earlier operating. TATA's first foray into the field was in Delhi, and after seven years, they are still trying to chart their way through the minefield that had been laid out by the erstwhile DESU. In Orissa, in fact, a foreign player gave up and ran away after handing it over to Goenka's for some salvage value. Based on the learnings, perhaps it can happen faster now. But, the greater the delay, the more difficult it's going to be.

There's a Ramky Environmental Management Pvt Ltd making money through waste management; there's Bindeswari Dubey making money out of 'Sulabh Souchalaya', helped along by municipalities. Leave it to Indian entrepreneurship to make money out of anything, and facilitate the process through transparent mechanisms, and all your problems will find their solutions.

 

Ananthram saaibre'
Full 5 stars for your 1st para; 2nd para though is rather vague.

 

Muralidhar Rao
asj's picture

Born with a silver spoon

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What is mai-bap sarkar?

Is anyone asking private players to donate money.

The demand is for stopping tax sops and development decided solely by market forces.

The demand is for regulation. If regulation means bangalore gets no more CT scanners and private players are forced to go to taluka then so be it.........question is will they go?

This debate is not about just life in Bangalore or Pune or Mumbai?

Its about over 1 billion people, 50% of whom are BPL as per new norms for the cut-offs.

Go to Dharavi and see how kids work on contracts sub-sontracted via major multi-nationals in West.

http://business.rediff.com/slide-show/2009/jul/15/slide-show-1-worlds-largest-economies-education-budgets.htm

ASJ

 

spry's picture

primary education

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Last month I got my daughter enrolled into pre-school. This area of primary education is controlled by private players only as Govt does not run any pre-school. We all know, to open up a pre-school it doesnt require any major investment. It can be opened up in any house and it doent even require a playground. I have done my education in mostly govt school, including engineering where I paid Rs 1,100 as semester fee. Now, these pre-school, i dont know on what basis, are charging minimum Rs 30,000 for 10 months with 3 hours daily classes. How on earth they can justify these high charges.  Can a common man, earning an average of 10-20K per month, afford to send his child to pre-school. 

I fully agree with ASJ. Private players would only be after money,profit and bottomline. They can do whatever they can to remain profitable. In a way, we are agreeing that 100% capitalist market would be disaster for our society. Govt should have its presence and control in regulatory format in all areas directly affecting common man.


murali772's picture

get into it

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@spry - If running a pre-school is so profitable, what prevents you from starting one, please?

Muralidhar Rao
psaram42's picture

It is not private vs public ideology dude

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The private vs public argument is a misnomer. The bad or good comes from the people resposible, being good or bad dude.

If we have this in mind it will be cristal clear IMHO.

Murali Avare.

Thanks for the generocity. You were abosolutely right. I added the required correction, in the second para. 5 out of 5 from Murali is my dream come true. Thanks again.

murali772's picture

keep it private

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If economic good is to be paramount, government must get out of economic activities that are best left to private players.

Government's role in economic affairs should be that of a regulator, overseeing private competitors to the extent of ensuring they play by the rules. As a regulator plus majority stakeholder of companies, government faces a conflict of interest that it often reconciles by skewing the level playing field it's meant to guarantee. Private firms are at a competitive disadvantage when their state-run counterparts are coddled. Consider the reported fiat to ministers and babus to only fly Air India.

For the full text of editorial comment in today's TOI, click here

Muralidhar Rao
murali772's picture

Exactly Doc! That's what we

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Exactly Doc! That's what we are also asking of the government - just confine itself to facilitation and regulation, and do a proper job of it. When it can't do justice to this basic function that it's meant to carry out, what business does it have in remaining in providing services and manufacturing goods?

Indeed I would like to start an online petition to the Maharashtra CM to facilitate the starting of a hospital in Dharawi by Doc ASJ. But, I wouldn't ask the government to start any more hospitals, wherever.
 

Muralidhar Rao
nl.srinivas's picture

Social justice

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In the end what matters is social justice.  Social justice can be ensured only through direct involvment of the state. If you let the capitalistic forces take their own course, even with the best of regulatory mechanism in place, I really doubt whether all can get access to "affordable" education and health.  You can always argue that competition will take care of it.  But see all the private schools that have mushroomed in and around bangalore. They are playing on the emotions of people and make them pay through their nose. Can those who support privatisation with regulation explain this?  If the state could regulate, it can as well run things on it own taking care of "all" sections of the society.

That does not imply the private players must not be allowed at all. They can erect as many wireless masts as they like( or make profit of). But in some areas they better be off limits.

 May be PSA sir is right. It is the people that matter not the ideology.

 

 


psaram42's picture

what is wrong with governament enterprise like BSNL?

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what is wrong with a public enterprise like BSNL? Murali Avare? Barring monoply a healty competition is ok for economic good. Ofcourse public undertaking like BEST a monopoly  also is acceptable by concidering it as a gift to the people of Bombay, who are toiling for countries economy. As long as BEST is not indulging in malpractices, it is acceptable. That is my point.

Rationing is co opertion ie Socialism when something is scarce like Cooking gas, which will be rationed now. Of cource the main objective of governament is to govern.

As long as some benefits are not diverted illigally ie (people bad) or people not putting full efort (agian people bad) it is still legal and OK. If you want the best out put with the minimum inut put then healthy competition.

abidpqa's picture

Private players or capitalism

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Private players or capitalism is good in cosmetics, software, etc but not not in healthcare i.e. hospitals, education, transportation, and other essential services which should only run by true nonprofit organizations. Some businesses can never be done for profit.

I think employees are not treated well by the capitalists. Salary may be good but how about the job burden with ridiculous targets to threaten the employees. Private sector have been employing child labor and not government.

They run their business with extralegal measures at least in India like bribes and muscle power. They create artificial scarcity with collusion and lobbying. Lobbying is not transparent. I think all the discussions between ministers and private citizens should be made public. There are bribes paid private sector deals too.

psaram42's picture

Again Wrong

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@abidpqa

Good = Law abiding; Bad=not law abiding

IMHO

Take the case of Dr. Devi shetty. It is good vs bad people and not ideology private vs public. He left Manipal Hospital which has a sufficiently bad reputation. I know personally at least some of the top doctors, who are not with Manipal any more.

Obviously the best Doctor and hospital comes with a price tag. Not because he is bad (avarices), but because he has limited time. He left Manipal because he wanted to give better service than possible at Manipal. This is possible only in free enterprise. Please imagine DS being in jayadeva. (Jayadeva though a government hospital is not bad at all.) Will he have the freedom there as in Narayan Hridayalaya? People poor and rich will have to wait till they die to see him if he were at Jayadeva!!!

Please apply similar logic to the other cases you refer.

Thanks.

spry's picture

SBI to our rescue

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Three years back:

I were very happy with the service quality of all the private banks and took no time in closing all my relationship with SBI when I opened an account in a private bank. When I wanted a home loan I preferred a private bank for their speedy and easy process.  I were very happy that "customer is king" is truely practiced by my "choosen" private bank. I were on the strong opinion that all the Govt owned bank should close their office and their employees should be sent to hell for their callous attitude.

Now:

Thanking Govt for not closing SBI. I am back with "my" old bank and transferred my home loan to SBI.  And I am not alone in doing so, ask anyone who have taken home loan from any private bank. I think i dont need to explain anything here. Mush has been discussed during recent credit crisis.

Murali sir, Hope u wont suggest me to start a pvt bank ;-)


psaram42's picture

How true!!!!!!!!!

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Same case here. I am fed up with HDFC bank. Every day I am cursing myself to have opened an account there. I have now all my accounts with SBI!!!!! SBI's on line banking system is number one.

Where as HDFC's is attrocius. Getting a password is a herculian task! Amazing how a governament organization can perform so well! Of cource now it has gone public to some extant.

The Answer is it is healty competition. Not a (Governament?) monopoly.

Murali Avare?

idontspam's picture

Some ans... err... questions

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@srinivas But see all the private schools that have mushroomed in and around bangalore. They are playing on the emotions of people and make them pay through their nose 

Who is the regulator for the schools? what are the rules, regulations and specifications laid down by that regulator for schools? Are there any universal service obligations being ensured by the regulator while granting license to start schools? What are the auditing and inspections being carried out by that regulator for compliance? What is the role of corruption in govt department that approves these private schools? How is your(tax payer) money being used to provide education in govt school? What is the standard and quality of education being provided to the downtrodden? What is the return(in terms of qulity of education) on the money being pumped in? do you want to pump more into the same system? What is the coverage of the govt school system and  what is the claim that it has achieved its social obligations? Has the govt looked at sourcing facilities and equipment from private parties for providing govt education? Are you willing to try a different approach to solving a problem? Does that approach involve utilising expertise available with enterprises instead of within the same department?

@PSA what is wrong with a public enterprise like BSNL? 

Why is your (tax payer) money being used to provide a service like a phone? Is it  in short supply? Do the people not have the technology to provide that service? What has been the reach of BSNL land line service when it was a monopoly? How is your situation wrt getting a land line during monopoly days vs now? If BSNL went away would you miss it? Would you rather put the money that goes into BSNL to some other activity?

@PSA The Answer is it is healty competition. Not a (Governament?) monopoly.

Yes it is and Govt does not need to be in sectors where private players can deliver same or better value. Why are we propping up Air india? Why is 4000crores going there vs 12000crores for all the cities of India combined under JNNURM? Make your list of loss making PSU's. Why are they still being propped up? Why is your tax money still going there? What is the intent? if it is jobs or unions, lets go back to the start of this thread.

@PSA If you want the best out put with the minimum inut put then healthy competition.

Very well put

psaram42's picture

May I refer to what is established on Praja

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@IDS

I am refering to our meeting with Mr. Mani sir. His views clearly spelt out the following:

  1. Governament is a custodian of public funds. It should exercise utmost care in utilizing the funds properly.
  2. The max efficiency possible is only 66.6666%(2/3)
  3. Concept of Mistrust
  4. Regulatory Authority
  5.  Transperency for leadership
  6. Credibility building is the grovnament's legitimate brief

With this frame work, the point I want to make is Governament is not prohibited to compete to deliver like in the case of SBI. If credibility is built sucessfully. Rule no 6 applies. 

In the case of Air India it should be booted out because of rule no 1 above. If BSNL is making profit why not? Otherwise it too needs to be booted out

I would also point out that Banking is in the ambit of security of thecountry. SBI is a subsidiary of RBI I suppose.

Vasanthkumar Mysoremath's picture

going round and round the mulberry bush...

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Hey guys,

Most of you are agreeing to agree with each other and many of you are agreeing to disagree with each other, like the nth round of India Pak discussions.  What is the point in arguing without logical conclusions?

I think it is time for Admn to enact a capitalistic control system and prescribe the maximum liimit of posts by a Praja on a subject with a moderator control+alt+del any posts that may go off tangent.

No doubt discussions are necessary but never ending...?  By the time this subject finds its end, I am sure, India's population would have soared to 1.5 bln. and PWG would have taken over India.

- Somebody please summarise and help us to have the pleasure of spending time on something useful.

- OK, now I am ready for a volley of....

- Vasanth Mysoremath

 

skumaras's picture

Why round and round the bush?

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 Hi,

Irrespective of whether it is the government or the private providing the service, there is a cost to providing it. In both cases, salaries have to be paid, and bills have to be settled.

The only difference is that in the case of the private sector, the cost is recovered directly from the beneficiaries and in the in the case of the government or the public sector partially from the beneficiaries and the rest from the general public or more specifically the tax payers. Also in the case of the government there is less incentive to do things optimally and efficiently.

I don’t want to generalize, but I think that the people who are clamoring for more private sector involvement are the ones who think that they get less value out of the government services from their taxes than what they would have got from the private sector.

And vice versa.

So it is difficult for the two groups to come to an agreement. That is why we are going round and round the mulberry bush.


Vasanthkumar Mysoremath's picture

Public Sector v/s Private Sector

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With independence and advent of Five Year Plans, creation of Public sector was a necessity and was born a few decades ago with holistic thoughts, goals and when the sperm of private sector had not been sown at all for - 

-  optimum utilisation of natural resources and raw material

-  for productivity of economical goods that are necessary for the aam aadmi

-  improving the industrial scenario

-  generation of employment opportunities

-  creating an industrialised nation etcetera 

Even today many central sector entities like BHEL, BEL, HAL, and financial institutions like SBI, IDBI etc., have been rendering yeomen service in the defense and civilian industrial/financial sectors and have even earned the coveted titles of Navaratnas with ISI, AGmark, and other certifications. 

All these are not for nothing.  Let us give the angels their dues.

Liberalisation may be a boon to some private players but they are definitely a bane to some well known public sector entities because the pvt. sector has been employing various corporate techniques and tactics to see that certain branded public sector entities become ill at the earliest and get into the BIFR emergy ward.   

Example: NGEF, Mysore Lamps, KAVIKA, KIMCO, have lost out to the onslaught of many MNCs and the government directors on Board of many of the flourishing public sector U/Ts, were asleep after a heavy lunch when decisions were being taken by a few vested interestes and were playing into the private lobbies.  

- Luckily, my Mysore Sandal Soap has withstood the acid attacks because it is a good soap - otherwise, private sandal oil soap mfrs (with their artificial scent) soaps would have swalloed and drank all the real estate water around these companies.

-  What I am trying to bring out here is, with all the page 3 approaches (read Capitalism), the aam aadmi's page 1 remains the first preference in a democratic country like Mera Bharat Mahaan because it carries the headlines (read Socialism) and people always look at page 1 before going to page 3.

- Vasanth Mysoremath  

 

asj's picture

My summary

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There are some nice gems in this thread, but to me PSA's approach is useful. I completely agree that the Private Vs Public debate is futile. I never got in to it because of my social incling, I got in to it to set the balance right as it seemed increasingly that we ought to prostrate to privatisation model when its credibility world wide (not just in India) is poor. Equally, there was complete dis-respect to the successful public sectors in India (and even more so in the worlds most successful and richest countries with free markets). I also agree with PSA's take on when social models are needed - when you have scarce resources and a billion mouths, social care has to step in for larger good (or else there will be anarchy). There is ultimately a difference between 'need and want', social care models are in service of ensuring everyone's basic needs are taken care of. There are some sectors which should remain public, there is just no doubt about that.

The bigger message in all this (and we can all keep going on and on with exaples of corruption, incompetence in both public and private sectors) is that either model (or cooperatives like Amul) can succeed when principles of good governance are not compromised.

On that note, when corruption is rife in private healthcare (and 80% of health provision in India is private), Murli-ji, I suggest we join forces first to first get the regulators in place, first lets weed out the filth in the system - beyond that I may consider the offer to run a hospital in Dharavi (though, fact is that there is abundance of private hospitals around Dharavi and another one is not needed, period - be it public or private).

Above, all, lost in all this debate, I would hope we agree that revenue collection through taxes (its mighty stupid to lose money through SEZ tax sops - to the tune of $40 billion = $1bn is 4000 crores = many times over and above the total budget of Metro projects in 6 cities of India, several times over our health and education budgets meant for entire population), implementing social security and health insurance for all (ESIS applies to employers with 50 or more employees - why should it not apply to you and me and the maid/drivers we employ - why should not every one contribute towards social security and health insurance). Why should not every farmer rich and poor contribute a base amount of say 10% even if we agree they should not pay taxes.

If every family out of the 60K families in Dharavi pay just Rs 1000/- per year and this is matched by their multi-national employers = 1.2K crores - the whole of Bombay Municipal Corporation has a health budget of 1.5K crores for running a massive network of hospitals where there is not enough money to even pay a decent salary forget about restoring the crumbling buildings and getting latest technology or doing cutting edge research). Just 1% Indians have a private health cover, 8% have a cover via CGHS and ESIS. The former is made up of policies which are completely useless as often they do not cover exsisting illnesses - I have not known anything more cheeky as this is a model that favours the private insurance companies in making profits and not the people buying the insurance.

Murli-ji, lets first get our Govt to start a scheme of the above kind, then I can think of running a hospital in Dharavi with 1.2K where every patient will be treated on the basis of their clinical need rather than ability to pay.

This link http://driving.india.googlepages.com/Businessmodelforreformingbusservices.doc should suggest to people where I come from. Its a proposal for reforming the business model of Pune bus services (its also an essential first step to privatisation) - it applies to BMTC too (and makes a reference to health services as well).

I expect even the better functioning BEST to reform to ensure they manage to balance their books. Yes a lot is wrong with BMTC, but  - they still manage 3.8 million passenger trips per day, they still manage to have a positive balance sheet in March every year. In such an event, why not see how we can help them hit 5 million passenger trips through comprehensive internal reforms - yes, the answer to this is that people like Murli-ji have tried this over years and nothing has come out of it. Nothing will come out of anything until there is public pressure - its no good saying 'our governments and in case of BMTC the corporators are useless, incompetent, corrupt' when we elect them, when we fail to come up with better candidates. The problem is not out there, we are very much a part of the problem (the thread on NICE and its possible fraud says it all - we the educated are accepting and tolerant of corrupt practices).  

No private player will touch the business of running urban bus based public transport with a barge pole until we get the MVA 88 amended - it demands there has to be a bus conductor on board - its a obsolete idea in days of smart cards, its even more stupid when we know they create a massive burden of overheads by way of wages (BEST also loses out every few years by way of VRS schemes and pension pots - not that these are not required, but it has to place massive sums of money on excess staff).

ASJ

PS: BSNL, MTNL, VSNL were never freebies, people paid for the service. They have done a reasonable job of getting landlines to remote India. We keeping talking about telecom reforms as an example - but really, this is only because of wireless mobile technology which has become cheaper over years - how many private players are there in India wanting to get in to offering land line connectivity?)

spry's picture

Why target only Govt sector.

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We are only concerned about taxes we pay to Govt but never ever question Private secotors on scale of profit they make from us. Who is paying for luxaries which private sector champions enjoy. Did we ever question Ambanis for building 34 story building for his family of 5-6 members when 75% mumbaites lives in slum. Who is paying for their luxaries. Do they not have any responsibilities when their profits are coming from common man.  Did we dare ask pvt secotors to limit their greed and help "common man" in their struggle to survival.

We become very vocal about "tax payers money". What about  "profiteering"? is there any control on that, that is also our money.

 


murali772's picture

sloped playing field

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Repeating the quote from the TOI editorial 'keep it private' I had posted yesterday:

As a regulator plus majority stakeholder of companies, government faces a conflict of interest that it often reconciles by skewing the level playing field it's meant to guarantee. Private firms are at a competitive disadvantage when their state-run counterparts are coddled. Consider the reported fiat to ministers and babus to only fly Air India.

In the case of BSNL, check here as to how the playing field has been skewed in its favour. In the case of banking too, SBI and nationalised banks do have the playing field sloped in their favour.

All the same, SBI, under the present MD, is reported to have improved its efficiency to a great extent, and the credit for that should also go to competition, quite as Ananthram has pointed out. SBI was my bank too for over 20 years when I was running my business, and I know how slothful they can be.  

RBI, the regulator, can be said to have been functioning fairly effectively all along.  
 

Muralidhar Rao
murali772's picture

let it roll

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its also an essential first step to privatisation

Well, well, that's interesting!

But, then you go on to say - "In such an event, why not see how we can help them hit 5 million passenger trips through comprehensive internal reforms - yes, the answer to this is that people like Murli-ji have tried this over years and nothing has come out of it. Nothing will come out of anything until there is public pressure - its no good saying
'our governments and in case of BMTC the corporators are useless, incompetent, corrupt' when we elect them, when we fail to come up with better candidates. The problem is not out there, we are very much a part of the problem (the thread on NICE and its possible fraud says it all - we the educated are accepting and tolerant of corrupt practices)."
 

Forget it, Doc! Like I stated before "What amazes me is the amount of intellectual intercourse going on on PRAJA to straighten out a BMTC, even as we all know how very simply the straightening out happened in the case of telecom, banks, insurance, airline services, postal services, etc - effective competition". Anyone who wants to waste his time and effort can pursue that. I very clearly see that effective competition, and that alone, will change BMTC.

It's ESIC, not ESIS. And in my opinion, the Insurance part of the ESI scheme is perhaps a useful one, and can be continued after professionalising. However, the healthcare part is a disaster, far worse than the regular government hospitals, and needs to be closed down totally - check this

And, Doc, what you are repeatedly pointing out is the unwillingness/ incapacity of the government to discharge its basic functions. Inspite of that, you want to burden it further with all kinds which can be done far better by the private players. I just can't understand the logic.

As for a summary, Yajamaanru has done a fair job already, and those are the concerns I share too.

And, let the debate continue, so that increasingly people begin to realise that we no longer need to prostrate before the 'commanding heights of the economy' of yore.

 

Muralidhar Rao
murali772's picture

@spry - perhaps you should

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@spry - perhaps you should try to read and understand a little more clearly what IDS and I are trying to say.

Muralidhar Rao
asj's picture

Small correction

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I have been repeatedly pointing out the unwillingness/ incapacity of the government to discharge its basic functions - well many have repeatedly pointed out inefficiency, poor regulation, lack of ethics and morality as well as corruption in private sector.

The emphasis is on regulation and structures of governance first then we can think of which model to use.

I would rather hear comments on purchaser-provider split model which I have suggested to PMPML (and believe can work for BMTC too) than a one liner saying 'let's privatise BMTC'.

Let's stop just giving counter examples and rhetoric. As you will see in the small example of health care provision in Dharavi, I have suggested universal mandatory health insurance as a basis of moving forward - there is no mai-baap sarkar giving a freebie here.

ASJ

PS: My experience in UK with postal services, banks and especially telecom companies is pathetic. My experience of similar players in India is not encouraging either - my parents gave up on so called private broadbands which were absolutely useless. They are quick to sign you up and do all the hard selling and forget about you later.

 

Vasanthkumar Mysoremath's picture

Doc, what is your point of order?

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Bash, Bash, Bash....!  Stating the obvious?

Again, going round and round the mulberry bush...

All these point to noman's land - where if you overstep, you can be shot from either parties.

Isn't enough is enough... pl let us not go on with the Indo-Pak talk mode.

We have all agreed 'there is no free lunch'. OK?

- Vasanth Mysoremath

kbsyed61's picture

ASJ, the solutions is in our backyard!

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ASJ,

I couldn't agree more on your assertions that the solutions to our national issue should be devoid of ideologies. Becoming slaves to the ideology should be last thing that we should attempt. Let me come to the point straight. Time again people do not get tired of quoting telecom department as the perfect example of PRIVATIZING/PRIVATE PARTICIPATION a government hold sector.

Before anybody start reading further, I urge the readers to go thru the story of Indian Telecom first.

http://www.slideshare.net/kbsyed61/the-story-of-indian-telecom

Is this Telecom being 100% PRIVATIZED theory a true fact? Does govt still offers the basic telephony to the urban and rural customers? The truth is government is still in the business of providing the basic and advanced telephone services. Then what is this story of telecom being privatized?

Up until 1996, Telecom services were 100% govt provided. When time for mobile telephony came, govt allowed the private players to offer mobile telephony services. it was very good and successful experiment. There came the telecom regulator 'TRAI' and also the allowing private players like reliance to offer basic telephony services. But this did not mean government agency like BSNL, MTNL suddenly disappeared from the scene. For major metros, the BSNL operations were corporatized into MTNL, but that is still a govt holding company offering the services.

Is there a lesson to drawn or learnt? Yes. Lets decipher the events in telecom sector.

  1. In 1996 govt added mobile telephony services with private players as the service providers. Later even BSNL joined in for the mobile pie.
  2. It opened the basic services to private players, but it still continued its operations and services. It seems it has also brought reforms and rationalized its services.
  3. A regulator was appointed and seems to be working fine except for few here & there skirmishes from BSNL, private players etc.

Let's apply this model to BMTC and public transport system that exist in B'lore.

  1. Create a single public transport authority that is responsible for planning and regulating the business.
  2. Best would be to have the regulatory authority to be independent of transport authority.
  3. Re-design/Re-jig the entire BMTC route system
  4. Relegate BMTC, DMRC to be service providers
  5. Allow private players in new areas of operation
  6. Bring autos, taxis, tempos into regulated PT umbrella and make it a part of the PT system
  7. Bring in new legislative laws for priority for PT on roads in city

Is this something we can take forward for further discussion?

pathykv's picture

BMTC

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I fully agree with your positive suggestions.

(by the way you are really burning midnight oil (Electricity?) to make these postings at 2-49 am!)

K.V.Pathy 

psaram42's picture

The telecom story

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Kbsyed61 avare,

 I read your masterly article “The Telecom story”. It is indeed a masterly written document. However I must admit I read till “Murga Bangh Tega”. While I am really ashamed of myself for not reading till the end, kindly allow me to put in some of my thoughts right now. 

We all should agree that government should be allowed to spend the tax payer’s money to the general good. That is why Tax is called Tax because it is taxing to cough up (hard earned?) money. But unfortunately we mere mortals do not understand (or better still do not want to understand) that we earn huge money because of the law and order maintained in our beloved land by a stable government. 

That is why in the early days of democracy in our land the likes of Babu Jagaleevan ram could visualize the importance of rural nature of our country that is India. Bapu’s  Panchayati Raj which is nothing but a local governance concept, is perhaps misunderstood. One cannot understand Local governance if one forgets that the economy also has to be local. 

I would like to call this as green economy. Green because it is sustainable. 

Unfortunately the above green economy has been rejected by us Indians long back. I refer to the Industrial revolution. The Kahdi movement is long forgotten. So we should not crib if some money is diverted to our villages in the form of providing Rural Telecom. 

In fact I am for a healthy competition between BMTC and other private Players for Bangalore city Transport.

vmenon's picture

an article from far east ..good india?

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An interestng artcle I came across.cant say how true it is, but inmtersting becuas eitcame out of far east whch is traditionally very china centric. also in built in the argument is that urban -rural divide on which many discussions happen and also on urbanisation . it seems to suggest that in india , the normal urbanisation ones sees around the world might not necessarily happen. long note ..have patience. v.menon By JOHN LEE • Wall Street Journal Asia. JULY 2, 2009 China and India will likely defy the economic malaise in Western economies and grow at more than 7% this year. But that is where the comparison should end. Contrary to popular hype, India is actually outpacing China where it counts most -- the economic growth of the rural poor. Half of China's population and two-thirds of India's still live in rural areas -- roughly 700 million people in each country, most of whom remain poor. In China, the urban-rural income ratio has become increasingly disparate; it was 1.8 times more in the mid-1980s, 2.4 in the mid-1990s, 2.9 in 2001 and now around 3.5. This trend starkly contrasts with the early years of Chinese economic reform. Over 80% of the poverty reduction in China occurred during Deng Xiaoping's reforms, between 1978 and 1988. Although per-capita incomes have risen since then, the net incomes of about 400 million people have declined over the past decade. India started from a lower economic base but has made greater gains: Its urban-rural income gap has slowly but steadily declined since the early 1990s. Over the past decade, economic growth in rural India has outpaced growth in urban areas by almost 40%. Rural India now accounts for half of the country's GDP, up from 46% in 1993. Unlike the Chinese, rural Indians do not have to migrate to already crowded urban areas to earn a better living. These trends mirror the path of economic reform in both nations. China had a huge head start in alleviating poverty. It began free-market reforms in 1978, while India only started on its current journey away from socialism toward a market-based system in the early 1990s. Since the turn of the century, India has been rapidly improving, but China has been getting worse. And since 2000, poverty and illiteracy in India have halved, while the same figures doubled in China. The role of domestic consumption in the economy also demonstrates the divergent paths of these two developing giants. In China, domestic consumption as a proportion of GDP has fallen to 35% from around 60% in the 1980s. The Chinese "economic miracle" depends mostly on exports and state-led fixed investment. Even Beijing consistently admits this is an unbalanced, unsustainable strategy. Moreover, depressed consumption levels and correspondingly high levels of savings by the citizens of a still-poor country mean growth is uneven and benefits relatively few. In contrast, domestic consumption composes more than two-thirds of the Indian economy. India has a lot of catching up to do, but its poor are rising with the tide, unlike in China. China's emphasis on state-led fixed-investment growth in urban areas may have fostered this trend, exacerbating inequality and heavily favoring a relatively small number of well-placed insiders. After the 1989 Tiananmen Square massacre, Beijing decided the state should reassert its control of economic growth, which had rested on private-sector entrepreneurship. Before Tiananmen, private-sector investment growth in rural China was growing at 20% annually. After Tiananmen, it dropped to 7%. Hundreds of millions of Chinese have since missed out on the fruits of the country's spectacular growth. The Chinese and Indian development models are not actually in competition, despite what newspaper headlines and books may suggest. But as magnificent as Shanghai now is, its shiny buildings have been built on the backs of peasants forced to deposit their savings into state-owned banks and receiving little in return. In contrast, India started its reforms 15 years later than China but is quietly and gradually building its base. Now that Prime Minister Manmohan Singh is starting his second term, he will do well to reject the dangerous appeal of the Chinese approach. Mr. Lee is a foreign-policy fellow at the Centre for Independent Studies in Sydney, a visiting scholar at the Hudson Institute in Washington and the author of "Will China Fail?" (CIS, 2008). M. Shahidul ISLAM (Mr) :: Research Associate :: Institute of South Asian Studies (ISAS) :: 469A Bukit Timah Road, #07-01 Tower Block, National University of Singapore, Singapore 259770 :: 65 6516 3777 (DID) :: 65-6776 7505 / 65-6314 5447 (Fax) :: isasmsi@nus.edu.sg (Email) :: www.isas.nus.edu.sg (Website) ISAS is dedicated to the study of contemporary South Asia. Important: This email is confidential and may be privileged. If you are not the intended recipient, please delete it and notify us immediately; you should not copy or use it for any purpose, nor disclose its contents to any other person. Thank you.
idontspam's picture

Morality of free markets

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 Interesting reading

Vasanthkumar Mysoremath's picture

Clean drinking water for the masses...talk solutions

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/The greatest failure of socialism in India lies in the moral sphere, confusing ideas of good and evil/

The above sums up the confusion that is haunting the mistrust, absence of  transparency and accountability and lack of credibility syndromes of the service providers.   If this continues, as has been done during the last 62 years, Can India become a nation with rational powerful thinking and delivery to the masses?

We have a draw line thick line somewhere and reduce such syndromes, inculcate the habit of 'Yes We can" and start a systematic way of considering the variables and deliverable solutions.  

My take: My article titled "Why can't we get Clean water for Namma Bengaluru' has appeared  - browse -  http://www.kaaranji.com/july2009_2/index.htm. (go to English pages on right side)

- will be happy to receive constructive criticisms from Prajegalu.

- Vasanthkumar Mysoremath

murali772's picture

doesn't help any

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Now, if the government sold a majority stake in public sector units, allowing new private sector management to take over, that would hugely improve efficiency. But only minority stakes will be sold.

For the full article by S A Aiyer in TOI, click on http://blogs.timesofindia.indiatimes.com/Swaminomics/entry/selling-family-silver-to-fund

And, that doesn't help!

Muralidhar Rao
murali772's picture

How to thrive in a Socialist economy

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This is a joke doing the rounds currently. But, I can't but help draw the parallels with the thriving gen-set/ battery, borewell/ tanker/ bottled-water, car/ two-wheeler industries under the existing regime

HOW TO SELL TOOTHBRUSHES

The kids filed back into class Monday morning. They were very excited. Their weekend assignment was to sell something, then give a talk on productive salesmanship.

Little Sally led off: "I sold girl scout cookies and I made $30," she said proudly, "My sales approach was to appeal to the customer's civil spirit  and I credit that approach for my obvious success."
"Very good," said the teacher.

Little Jenny was next: "I sold magazines," she said, "I made $45 and I explained to everyone that magazines would keep them up on current events".
"Very good, Jenny," said the teacher..

Eventually, it was Little Johnny's turn. The teacher held her breath ...Little Johnny walked to the front of the classroom and dumped a box full of cash on the teacher's desk. "$2,467/-" he said.
"$2,467!" cried the teacher, "What in the world were you selling?"
"Toothbrushes, " said Little Johnny.
"Toothbrushes! " echoed the teacher, "How could you possibly sell enough tooth brushes to make that much money?"

"I found the busiest corner in town," said Little Johnny, "I set up a Dip & Chip stand and gave everybody who walked by a free sample."
They all said the same thing, "Hey, this tastes like dog shit!"
Then I would say, "It is dog shit. Wanna buy a toothbrush?"

"I used the governmental approach of giving you something shitty for free, and then making you pay to get the taste out of your mouth."

 

Muralidhar Rao
murali772's picture

Jugaad - our most precious resource

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Excerpts from the colunmn by Swaminathan Aiyer in today's Sunday TOI (for the full text, click here)

In the West, innovation is done by scientists using expensive equipment. In India, it's done by every housewife, farmer, transporter, trader and industrialist. It does not require high-spending R&D: it simply needs creativity and imagination. Anil Ambani once said Reliance succeeded through innovation, not invention.

One avatar of jugaad is what management gurus call "frugal engineering", exemplified in the Tata Nano, the cheapest car in the world. India's telecom companies provide calls at Re 1 a minute, the cheapest in the world.  Narayana Hrudayalaya and Shankara Nethralaya provide the cheapest heart and eye treatment in the world.  Indian reverse-engineering of patented drugs is also frugal engineering.

Some management experts warn that jugaad uses any means, legal or illegal, to get a job done. They say bribery and manipulation must not be confused with genuine creativity. I disagree. The creativity in unethical activity is, with rare exceptions, not fundamentally different from the creativity that yields frugal engineering. The incentives and rewards of the political-economic system determine whether creativity is used mainly for unethical profit or heroic productivity.

The hawala market, for instance, is used by drug lords for money laundering. But it is also an example of jugaad, enabling poor migrants to remit money across countries, faster and more cheaply than any formal bank system. Hawala was legal for centuries before modern governments declared it illegal.

Dhirubhai Ambani was the master of jugaad. The licence-permit raj made it impossible for him to progress legally, so he exploited the corruption and cynicism of the system. He exported junk to get profitable import entitlements. He created industrial capacities vastly in excess of licensed capacity. He imported huge textile machines as "spare parts". He engineered highly profitable changes in rules for polyester imports and telecom licences. The jugaad he used to overcome hurdles was not distinguishable from crony capitalism. Yet when the licence-permit raj gave way to a more open and deregulated economy, Dhirubhai used the same jugaad to scale dizzying heights of productivity and become world class. His giant refinery complex in Jamnagar had the highest refining margins in the world, beating the Singapore refineries. He converted to reality his vision of making telephone calls cheaper than a postcard.

Dhirubhai showed that manipulation and world class productivity are two sides of the same coin called jugaad. If governments create business constraints through controls and high taxes, jugaad will be used to overcome those hurdles. But if deregulation abolishes these hurdles, the main business constraints become lack of quality and affordability, so jugaad shifts to improving productivity, quality and affordability. That ultimately makes you world class.

Jugaad is amoral. If laws are oppressive, jugaad will seek ways round the law. Yet this amorality kept Indian business alive in the 1970s when controls were buttressed with income tax of 97.75% and wealth tax of 3.5%. Honest businessmen would have been taxed into bankruptcy. But jugaad, including innovative tax dishonesty, kept Indian business alive, and enabled it to surge when economic policy moved away from insane socialism.

Socialist politicians viewed themselves as golden-hearted geniuses who knew better than greedy Marwaris about what should be produced. Nobel Laureate Friedrich von Hayek pithily called this "the fatal conceit".

Socialist planning was supposed to optimize use of India's resources. But it assigned no value at all to the marvelous innovativeness and enterprise of Indians in every branch of activity.  Five-year plans sought to optimize financial resources, mineral resources (like coal and oil) and administrative resources. But they sought to crush enterprise and jugaad, the most precious resource of all. That has now been liberated by economic reform, and the value of jugaad has gained worldwide recognition.

The delivery of government services — education, health, infrastructure —remains terrible. Here too socialist control needs to be replaced by jugaad.  Alas, politicians and socialist ideologues will not allow it.

How can anyone defy Aiyer's plain and simple logic? His comlumn is must on my Sunday reading list.

Muralidhar Rao
murali772's picture

does it require any more convincing?

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The government doesn’t fine another government agency, since they are all run from state money. By the same token, an agency of the state doesn’t wind up for reason of loss of business or money; governments make the rules on taxes and money. A private company which has to pay a penalty or otherwise loses money will have to pay from its own coffers, which means from the money it earns. It cannot pass on the demand to the parent ministry or the treasury. The imperative for competition and choice, and keeping the state from being both umpire and player, in other words, isn’t because non-government staffers are intrinsically more efficient or their systems are. It is because they have to, at some measurable point, deliver or pay up; this is not true of the state.

Nothing concentrates the mind as clearly as the prospect of your pants being sued off you if your calculations go wrong. Governments or legislatures may choose not to enforce that option due to lack of will or to help a pal, but it is very much available.

For the full text of the editorial in the New Indian Express, click here

How much more convincing does it need to be?

Muralidhar Rao
murali772's picture

govt failure, private sector success

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Now that the Commonwealth Games have commenced, glitches and all, we can assess them more soberly than the high-pitched media sound bites of recent weeks. Many critics complain that the Games show India in a terrible light. In fact, they provide a pretty accurate representation of the country.
    
Globally, the big picture shows India as a major success story. In fact, it is largely a story of private sector success and government failure. Many Indian companies have emerged as world class, but government services and corporations have, with some honourable exceptions, remained ridden with waste, corruption and callous inefficiency. The Commonwealth Games accurately mirror this reality: they too represent a mix of private sector success and government failure.
    
The contrast with China’s successful management of the 2008 Olympics is truly stark. But it is not the case that India is universally shoddy. Ambani, Infosys or Tata are known for completing large, complex projects on time and within budget. The public sector, alas, is known for the very opposite.
    
China’s success has been largely government driven. Even so-called private companies in China are often controlled by party bosses and officials. The state mercilessly destroys slums and other structures without adequate compensation when it so feels, as in the 2008 Olympic facilities.
    
The contrast between China’s management of the 2008 Olympics and India’s management of the CWG shows, yet again, that China is largely a government success, while India is largely a private sector success. Economic reforms have enabled the private sector to bloom in India, but many key tasks can be done only by the government — law and order, justice, rural infrastructure, welfare measures, basic education and health, and much more. Unless the government improves its performance dramatically, India cannot hope to catch up with China.

For the full text of the column by Swaminathan Aiyer in the TOI, click here

 

Muralidhar Rao
murali772's picture

festive gift to the aam aadmi

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Pitched as a festive gift to the aam aadmi, Monday’s launch of state-run Coal India Ltd’s (CIL) initial public offering will boost the disinvestment process.

PSUs benefit from enhanced private shareholding in terms of achieving greater efficiency and profitability. However, look closer and the government as majority shareholder doesn’t always safeguard minority investor interests. Given that state-run firms, be it coal or oil, are opaque in functioning and often compelled to sell below cost to facilitate social sector or populist schemes, shareholder interests aren’t always the priority.

Public sector monopolies are desirable neither in principle nor practice. The government should really aim at getting out of the business of running coal mines – as, for that matter, airlines and hotels – so that money thus raised can be better used to build the social and physical infrastructure that India desperately needs. State stranglehold over the coal sector has not only meant production shortfalls, quality concerns and costly reliance on imports, it has also impeded expansion of economically crucial sectors like power, which are dry fuel-dependent.

Above all, government must encourage, not dissuade, private players so that mining gets more competitive, acquires the resources to grow and diversify faster and is more accountable to all stakeholders. The coal sector especially is in crying need of such change.

For the full TOI editorial, click here

Pranab-da has put it quite well. By this, he is imparting actual meaning to the term 'public'ownership'. And, it's happening across all sectors, though a bit too slowly, for one's liking
. But, namma Kar-nataka will continue to hold on to its 'family jewels', it looks like, till they have lost all their sheen.
 

Muralidhar Rao
murali772's picture

Price of sop politics

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Prices of primary articles have doubled since the UPA came to power in 2004. Equated Monthly Instalments are rising every quarter. Interest rates on student loans are between 13 to 15 per cent. Indeed, interest rates for housing loans are — believe it or not — as high as they were in August 1997.

Look around and you will discover everything that is in the domain of the private sector — product and services — and subject to competition have either become cheaper or at least at inflation adjusted constant. Everything that is controlled, regulated, distributed and produced by government is riding the upward graph. Interest rates are but a part of the theorem of inflation and are again governed by the laws of supply and demand. Thanks to the profligacy, government demand for money has been rising exponentially as it continues to spend way beyond its means.

 

For the full column by Shankkar Aiyer in the New Indian Express, click here. All so very true. And, looks like Mr Shankkar Aiyer is browsing through PRAJA too:))).

Muralidhar Rao
psaram42's picture

What is inflationary Corruption?

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The article referred by Murali above starts off like:-

The anger and fury over inflationary corruption has edged out inflation in the economy from the front pages.

I am still trying to figure out what can be non inflationary corruption. However I found two interesting comments. One of which is:-

Really good article Shankar. Kudos for being able to bring out such a subtle fact into the open. Another thing to mention is the UPA's government's stunning indifference to corruption, and to terrorism, which further fuels the economy to a higher inflation curve. 

Corruption in simple words is lack of integrity or honesty (susceptibility to bribery); use of a position of trust for dishonest gain. where as Inflation is a natural phenomenon which is closely related to demand and supply. Government need to monitor hoarding / manipulation of prices etc.  That is good governance. Other wise it is not. Corruption sets in the rot.

murali772's picture

India Inc is not a small crony club

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Overall, Indian business has undergone a huge churn, despite a fair amount of crony capitalism. One reason is that many of the well-known crony capitalists today are not old giants but newcomers in real estate and infrastructure---DLF, Unitech, GMR, GVK, and Lanco. There is churn even among cronies.

So, it is simply wrong to claim that India is dominated by a handful of business oligarchs with political connections who wreck competition. The heartening message of 20 years of reform is that newcomers keep breaking into the top 30 with surprising regularity.


For the full text of the column by S A Aiyer in the Sunday ToI, click here

- a point that I have made earlier too.

Muralidhar Rao
murali772's picture

Neo-illiberalism the country's bane

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Neo-liberalism is said to represent the abolition of nearly all regulations, leaving everything to markets. No country has such a regime and never will—governments do not come to power in order to abolish all their powers. So, neo-liberalism is a straw man. Far from being neo-liberal, India remains terribly illiberal. The 2G scandal, the Adarsh housing scam, the Commonwealth Games scam and many others are the consequence of politicians making money out of allocations, permits and contracts.

In this Index of Economic Freedom, India ranks 124th out of 183 countries. Is this really too liberal? Would we be better off becoming even less liberal and matching Togo (153rd) or Sierra Leone (164th)?

The Heritage Foundation divides all countries into six categories, ranging from free to repressed. India, alas, falls into the category “mostly unfree”. Will we be better off moving to the category “unfree”? Should we be going in the direction of North Korea and Myanmar?

Again, consider the Doing Business reports of the IFC/ World Bank. The 2011 report rates India 134th out of 183 countries in “ease of doing business”. Is it not a cruel joke to call this neo-liberal? India ranks among the most illiberal countries in the world in starting a new business (166th), getting a construction permit (177th) and enforcing contracts (182nd). Is there really a case for tightening controls and coming last in the world?


But we have moved from the old illiberalism (where everything was controlled) to a new illiberalism, where some sectors are liberalized (helping increase the economic cake), while other sectors are kept illiberal to enable politicians to extract more than ever out of an expanding economic cake. This is not neo-liberalism. It is neo-illiberalism. This is not the Washington Consensus. It is better called the New Delhi Consensus—all parties are fully agreed on continuing to making money out of a smaller but hugely profitable licence-permit raj.

For the full text of the column by Mr S A Aiyer in the SToI, click here.

Couldn't have said it better, Sir!

Muralidhar Rao
murali772's picture

Why nobody cares to occupy Dalal street.

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This (occupy wall-street) movement will not spread to India despite the Left’s best efforts. We are at an early capitalist stage of dynamic growth. Millions of new jobs are being created and although inequality is growing, the average person is rising. India’s problem is largely governance; hence, protests in India are about corruption. - - - It would be a great pity if this new generation of aspiring, hungry, hardworking young Indians is spoiled by West’s culture of entitlement. The Congress Party is unthinkingly bringing such a culture to India with welfare schemes which reduce the desire to excel. The employment guarantee scheme is already beginning to hurt the work ethic in rural India. Instead of creating phony jobs through NREGA, the government should invest in roads and power, as China has, and this will lead to real, productive jobs.

For the full column by Gurcharan Das in the ToI, click here

Can't but agree.
   

Muralidhar Rao
murali772's picture

Ambani getting richer/ poorer is not quite the tribals concern

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Tribals are surely outraged by differences in power and income between them and the corrupt officials and forest contractors who have long run outrageously exploitative fiefdoms in the Maoist belt. But i doubt they know or care about the wealth of Mumbai industrialists, or of the sharp fall in that wealth in the last four years. - - -

People have always prized opportunity over equality. Thousands risked death scaling the Berlin Wall, to get from egalitarian East Berlin to inegalitarian West Berlin. People swam shark-infested waters to get from Mao's egalitarian China to inegalitarian Hong Kong. Nobody swam in the opposite direction.

Tribals have gone Maoist because they have long been neglected and exploited, not because the Ambanis are too rich. Tribals desperately need more opportunity, not lower gini coefficients.


For the full text of the column by Sri S A Aiyer, click here.

Whenever the question of the efficacy of PDS or NREGA is raised, Socialists immediately point to the concessions offered to rich investors in the form of tax exemptions on dividends, etc. Well, here clearly is why the people who bring in "risk" capital need to rewarded better (than those who play safe through investing in deposits, the interest earned on which is taxable) when the going is good, since, when the going is bad, it is their capital that is getting eroded, whereas the capital of those playing safe, remains totally protected.

Muralidhar Rao
murali772's picture

competitive socialism

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This is why taxes were cut in 2008-09-to generate a big stimulus for an economy hit by the Great Recession. At the time, the left supported a strong stimulus to help the aam admi. Yet today, some tax cuts are being called "revenue foregone" and decried as corporate loot.

- - - The finance ministry must abandon its ridiculous methodology for calculating "revenue foregone." I am all for exposing the long list of tax exemptions, many of which are unwarranted, but oppose nonsensical calculations that mislead instead of clarifying.  


For the full text of the column by Sri S A Aiyar in the Sunday ToI, click here.

This "revenue foregone" is a favourite bogey of CPI parliamentarian Mr D Raja, whenever he comes on TV debates on economic issues. And, by inventing such terms, the 'PronobDa' s of this world are just playing into the hands of the likes of D Raja. Or, more likely it is competitive Socialism between Sonia Congress and the Left.

Muralidhar Rao
murali772's picture

quite in sync

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To understand what ‘reform’ means, recall the early 1990s, when P V Narasimha Rao, as prime minister, was skilfully U-turning the Nehruvian socialist India that had put most economic space in government hands. See the sea of changes he brought about, without much ado. He repealed the draconian industrial licensing law that destroyed Indian entrepreneurship and the monopoly law which put a cap on the size of Indian corporates; abolished capital issue controls and brought in regulatory SEBI; instituted the National Stock Exchange and digital trading in stocks; brought about rationalisation of import tariff, excise duties and income tax; raised the FDI limits for foreign joint venture partners to 51 per cent. This integrated package reducing the government’s role in command economy illustrated economic ‘reform’.

For the full text of the article by Mr S Gurumurthy, in the New Indian Express, click here.

Yes, he has criticised 51% FDI in retail. But, otherwise, he is talking a language not too different from what the overall trend amongst PRAJAgalu appears to be.

On the question of FDI in retail, as far as PRAJAgalu is concerned, the jury still seems to be out, and will perhaps remain there  - check this.

Muralidhar Rao
murali772's picture

bank-based vs market-based reforms

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Take Japan, Germany, France and other Continental European nations. The GME Consulting study on the saving behaviour of West, citing researches on ‘market-based’ and ‘bank-based’ economies, says, ‘one of the fundamental differences’ continues to be ‘the traditional division between the Anglo-Saxon ‘market-based’ economies and the Continental ‘bank-based’ model. Germany and other southern European countries remain heavily dominated by their banking sector”. It also shows that the savings rate in bank-based economies is higher. According to Business Week (September 30, 2010), in the end of 2009, stocks constituted just 3.9 per cent of German household financial assets; life insurance 28 per cent and cash and bank deposits 38 per cent. Japan is identical. In a paper presented to the Bank of International Settlements in May 2009, Bank of Japan officials point out that ‘Japanese households prefer bank deposits over risky financial assets when all the financial instruments are so well-developed and heavily traded in Japan unlike in other Asian markets’. The ‘bank-based’ Japan and Germany are as efficient as the ‘market-based’ US, if not more.

- - - Indian ‘reform’ process has to be endogenous. Not exogenous. Yet, Indian ‘reformers’ are habituated to search the waste paper baskets of the ‘market-based’ US for its outdated ideas to ‘reform’ the Indian economy. Are the ‘reformers’ listening?


For the full text of the essay by Mr S Gurumurthy in the New Indian Express, click here.

The question that arises is can bank-based reform by itself take us to the level of growth required for addressing our 40% + poverty levels

Muralidhar Rao
blrpraj's picture

socialism does not work

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A socialist model does not work. Just look at former USSR and the pre-liberalisation India, North Korea etc. And when Govt. gets into the business of manufacturing, providing services etc. it sucks, especially when they are a monopoly and that too run by the Indian Govt. Not convinced? Look at Indian Railways; look at Air India (thankfully in this case govt allowed private airlines starting in the early 90s);look at HMT etc. and of course, how can we forget the AAI run cowsheds that we used to call airports until recently.

The way to go is the capitalist way, but of course it needs to be a "regulated" capitalism. An unregulated capitalist system is probably equally or more dangerous than a socialist system..look at worldcomm, enron, loehmann brothers,sathyam etc. or in fact private bus operators (lack of enforcement and unregulated private bus operators are causing havoc, there are so many bus accidents in india and is spiralling out of control, see travelbyvolvo.blogspot.com which has a complete section on bus accidents if you don't believe me).

Bottom line is govt has to act as the regulator, watch dog and enforcer. It's job is to create a level playing field  and provide a skeleton of basic social services for the economically backward, leaving the manufacturing and providing of services to the private sector.

 

psaram42's picture

No ism works when basic social fabric is corrupt.

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In kali Yuga, where fence eats the crop, nothing works. We get what we, as a society, deserve. We have to wait for Rama rajya after the present kali Yuga

Naveen's picture

Neither is true

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A socialist model does not work........The way to go is the capitalist way, but of course it needs to be a "regulated" capitalism.

I think neither is true nor false. Whilst socialist countries like USSR may have failed miserably due to excessive socialist tilt, even capitalist economies like US have had their share of problems with the likes of Enron, Lehmann bros, etc. "Regulating" is easier said than done, even in countries that have well developed govt mechanisms to control malpractices.

If one checks the records for excellence, countries such as New Zealand, Singapore & the Scandinavian countries (Norway, Sweden, Finland & Denmark) stand out for least corruption, but they are not entirely capitalist, either. Many service sectors (such as railways, water, power, PT systems, etc) still remain with govts.

For developing countries such as India, the problems are far more complex since govt monitoring is poorly developed & people at almost all levels are corrupt - from the local shop-keeper to the highest businessmen or ministers, exceptions notwithstanding. Frequent change of govts & policies adds to the laundry list of problems. Unless we have people that follow the laws of the land, no system will ever work towards betterment.

China has been arguing that it's people were not ready yet to enjoy the benefits of democracy (though some provinces are now practising democratic principles) & corruption has been made criminal, punishable with death in extreme cases. Their system seems to be working as some 400 million people have been lifted out of poverty within the last 15 years - they now have under 20% remaining, whilst in India, we keep redifining limits for poverty lines to claim 'development' & 'progress' whilst continuing to lose the battle against poverty erradication.

murali772's picture

two highly readable columns

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1) For the full text of the  one by Sri S A Aiyer, in the SToI, click here

Budget problems in the US are totally different from those in India. The US has been badly hit by demographic change. Earlier, its baby-boom generation contributed more in taxes than it took out. But now the boomers are retiring, and will take out much more (through Medicare as well as Social Security) than the next generation will put in. Both George W Bush and Obama have greatly increased health entitlements . So, total US spending on three items — Social Security , Medicare and Medicaid (for the poor) — is projected to skyrocket from around 8 per cent of GDP today to 18 per cent by 2025. This is the crisis Obama has to tackle.

India, however, has excellent demographic prospects. The proportion of Indians in the working age group 15-60 will rise by up to 300 million over the next two decades. This means buoyant tax receipts. If economic reforms ensure that their productivity keeps rising, fast growth will add to the revenue boom. That’s exactly what happened in ASEAN’s boom years: a rising workforce and fast growth helped raise both living and social standards. This was growth with social justice. India should follow the same path.

 

2) For the full text of this one by Sri Gurcharan, again in the SToI, click here.

What keeps me awake at night is that many of our policies have corrupted the morals of our people. When we cancelled loans of Rs 60,000 crores in 2008, a farmer who had just repaid his loan, sadly said, ‘What is the use of being honest? Human society is based on trust. We learned as children to keep our promises and repay our debts. Tulsidas reminded us, ‘praan jaye par vachan na jaye’. Loan waivers wound our moral universe in the same way as ‘make-work’ jobs adulteration of diesel with kerosene, and the vast theft of PDS food.

Muralidhar Rao

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