Calcutta Diary

Privatisation, it almost seems, is for the sake of privatisation alone, disinvestment for the sake of disinvestment. In the beginning, the pretext was there that the unloading of government shares will be confined to loss-making public sector units. That pretext has now gone the way of all flesh. Even public undertakings enjoying massive profits, such as the oil corporations, are to be denuded of government equity. The comparison with impoverished feudal princelings who start with selling plots by lots and end up by disposing of pots and pans inevitably comes to mind. The government in New Delhi is now even prepared to lease out airports.

The significance underlying such apparent madness is easily comprehended. Privatisation and disinvestment are to assure foreign investors that we have moved away from the shibboleths of socialism; henceforth we mean business, henceforth it is the private sector which will rule the roost in Mahaan Bharat. Unfortunately, would-be foreign investors are not impressed by such gestures, nor are international credit agencies. The magnitude of direct foreign investment has dipped in recent times, credit rating for India, already low, has gone further down. Even short-term capital flows, in the garb of portfolio investments, have been behaving temperamentally in the current year. As a result, the country’s foreign balances fell continuously for five to six weeks. That trend has been halted because of renewed interest of speculators in the Indian share markets and the dubious sale of so-called millennium bonds. Such renewal of ardour for picking investment already on the ground is not echoed in the case of fresh investments though. Not surprisingly, overall employment in the economy has shrunk during the ‘reform’ years even as growth has slowed down. Imports have supplanted growth, industrial units, bereft of the state’s protective cover, have closed their shutters one after another. Enlarged imports have depressed agriculture as well, and the impact on output and employment in the small-scale sector has been most severe. As happens in any recessionary period, as employment contracts, the bargaining power of the working class and the poorer sections weakens as well. But a time comes when even the worm turns, witness the spate of industrial unrest in the last few weeks.