Commanding heights return

A poorly run state sector inspires no confidence

Finance Minister Pranab Mukherjee may have snubbed Railway Minister Mamata Banerjee by agreeing to clear the 24 projects worth Rs 15,000 crore that she wanted for her ministry with the proviso that she would have to find the money for them herself. But there’s something eerily familiar with the script. More than anything else, it represents a return to the old days of “commanding heights”. Coming as it did, a day after the government finally made some moves on reducing fertiliser subsidies, it signalled the confusion within the government on whether it was finally ready to go ahead with economic reforms. In the weeks prior to this, this newspaper carried several reports on how the government was going back on its stated policy of encouraging private sector players in the field of defence production. These reports cited various examples of contracts where the government took a position that went against private sector Indian firms. For instance, the minister of state for defence said in an interview that his ministry had scrapped the plan to nominate leading private sector defence suppliers as Raksha Udyog Ratnas, which would have granted them the same status as defence public sector units or ordnance factories. This policy would have reimbursed firms most of their R&D expenses and was, therefore, a critical component of reforms in the sector and would also have provided them a level playing field vis-à-vis government production units with regard to various tax benefits.

The same bias in favour of the public sector was also seen when, in the Bt brinjal case, the government gave an impression that the results of the tests could not be trusted as they had been conducted by private sector firms. Environment Minister Jairam Ramesh may have gone by the book as he put a moratorium on the commercial use of the Bt seeds after contacting different scientists and stakeholders. But his focus on creating a “countervailing power” to the work done by Monsanto was jarring, as was his comment on the number of “Indian-origin scientists” who work in Monsanto (as if this made the science better or worse). Indeed, Mr Ramesh’s idea of “countervailing power” was not about setting up more private firms since he rued the lack of a ‘large-scale publicly-funded biotechnology effort in agriculture’.

A couple of recent bills of the government reinforce this view. The Biotechnology Regulatory Authority of India Bill, for instance, has a section on misleading the public about organisms and products and the punishment for those found guilty of this charge is a jail term of six months to a year. Theoretically, anyone who speaks against genetically modified products can be imprisoned for misleading the public; there are even prison terms for those demonstrating against such products. Little wonder that the scientific community is up in arms against the proposal. The Right to Education Act, as has been pointed out before, is also flawed since, instead of focusing on educational outcomes, it focuses on infrastructure standards. This will likely drive out most unrecognised private schools that, as several studies have shown, offer education levels that are no worse (though often better) than those offered by government schools, and at costs that are much lower. While the move towards “commanding heights” is questionable, what makes this unacceptable is that those in charge of these heights are not doing much to ensure their better functioning. Witness, for instance, the delays and the confusion over the BSNL tender, and this is just one of the recent examples.