Manmohan Chants Privatisation Mantra For Bihars Growth Revival

Former Union finance minister Manmohan Singh has urged the Bihar government to encourage private and co-operative sectors to make state-owned corporations viable.

Over the years, the states role in economic development has expanded more than its administrative and financial capabilities. The regulatory role of the state has received greater attention than its promotional functions, Singh said in a paper presented at the first annual conference of the Economic Association of Bihar recently.

Singh said most of the government boards and corporations covering areas like textiles, film development, electronics, transport and sugar had failed to achieve their objectives.

They should either be closed or privatised. For those which cannot be closed, clear and transparent mechanisms ought to be evolved under efficient management, he said, adding ministerial interference should be eliminated.

In the paper, which outlined a series of measures for a major turnaround in the industrial and agricultural sectors, Singh referred to the dismal state of affairs in Bihar State Financial Corporation.

The Corporation has financed more than 7,000 units, but most of them have failed to generate adequate surplus to service their debt obligations with the result that the Corporations non-performing loans form a staggering 88 per cent of its total outstanding portfolio, he pointed out.

The state of financial organisations like the Bihar State Industrial Development Corporation, the Financial Development Corporation and the Credit and Investment Corporation was also a cause of concern, the paper said.

Singh emphasised the need for rehabilitation and modernisation of sick Central enterprises like the Heavy Engineering Corporation and abolition of the freight equalisation system for steel to provide incentive for setting up new industries in the state.

For achieving a growth rate of seven per cent in the Ninth Plan period and 8-9 per cent in the 10th five year plan, Singh suggested more attention on raising agricultural productivity level.

However, he maintained that a techno-economic approach to modernisation of agriculture had serious limitations as the states agrarian economy still had many semi-feudal characteristics.

The highly skewed land distribution pattern, an extreme preponderance of small and marginal holdings, widespread practice of share-cropping and oral tenancy constitute formidable institutional barriers to growth and modernisation of agriculture, he noted.

He emphasised the need for co-operation with Nepal to devise viable strategies for water management and food control in north Bihar.

Greater attention to diversification of agricultural economy with special emphasis on development of horticulture, floriculture, animal husbandry and fisheries was necessary to boost the agriculture sector, Singh said in the paper.

He lamented the abysmal performance of the state electricity board and noted that paucity of electricity was responsible for poor growth of both the industrial and agricultural sectors.

He said the government should explore all viable options to improve the efficiency of its power sector, including privatisation of generation and allowing independent power producers to sell electricity to select bulk consumers.