From the Editor-in-Chief
OUR cover story may be unusual – defence of a public sector behemoth with a mixed track record – but it offers a critical and sharp insight into how lack of good governance – both by omission and commission – can hobble the larger interest of a nation. It is also a commentary on how economics comes full circle every now and then. In the Nehruvian era and then during Indira Gandhi’s rule, the public sector was unassailable. It was a sacred cow whose name you vilified in the press or in public utterances only at the peril of being branded a reactionary or anti-national.
Economist PC Mahalanobis deified an economic model of development and capital formation in underdeveloped countries by postulating that nationalized or public sector enterprises should rule the commanding heights of the economy. But, as the Soviet model of development, on which Mahalanobis had founded the Nehruvian economy – a trend that accelerated under Nehru’s daughter – began to crumble, India awakened into the dawn of liberalization in which the old shibboleths were unceremoniously jettisoned. Privatization and globalization, de-control and disinvestment, competition and entrepreneurship became the new magic watchwords as India hurtled headlong into policies applauded and egged on by the World Bank and the International Monetary Fund.
That was a heady period in which “world’s second fastest growing economy,” and “India Shining” became catch phrases for politicians and promoters of the new Indian dream that included a bulging, white goods-consuming middle class. Then followed the worldwide recession in which the US and European economies took a beating, their banking and financial systems crashed, and the unemployment lines grew longer and longer.
This crisis – which India mostly escaped because of its continued public spending and stricter regulation of banking and trading activities, stable agriculture, and a continuously growing domestic demand factor – nonetheless focused attention on “left of centre” economists like Nobel laureate Amartya Sen who emphasized that economic growth without inclusiveness and social growth was not economic growth at all but a mirage of numbers. He also emphasized the role of the public sector in boosting growth with justice and reducing disparities. This thinking spread rapidly in countries like the US and the UK where “nationalization” and massive government subsidies and spending, even at the risk of humongous monetary and fiscal deficits, were considered a more acceptable alternative to a full-fledged depression.
In India, the crisis forced a re-thinking on unbridled privatization of PSUs and blind disinvestment. This is not an argument supporting PSUs that are a drain on the public exchequer or a playground for babudom and political patronage. It is rather a case for seriously examining the social role the public sector can play –given the huge investment in it of the nation’s scarce resources – as well as for modernizing it and making it as profitable and efficient as the best of any American, Indian, or European private corporation.
That is why Naresh Minocha’s cover story on ONGC – the nation’s first oil explorationgiant – is an important learning experience. It details the great potential that a PSU like ONGC has for the public good and for catalysing a vibrant economy as well as the waste and mismanagement and deliberate manipulation by politicians and bureaucrats that are sacrificing its remarkable potential at the altar of vested interests.
OUR cover story may be unusual – defence of a public sector behemoth with a mixed track record – but it offers a critical and sharp insight into how lack of good governance – both by omission and commission – can hobble the larger interest of a nation. It is also a commentary on how economics comes full circle every now and then. In the Nehruvian era and then during Indira Gandhi’s rule, the public sector was unassailable. It was a sacred cow whose name you vilified in the press or in public utterances only at the peril of being branded a reactionary or anti-national.Economist PC Mahalanobis deified an economic model of development and capital formation in underdeveloped countries by postulating that nationalized or public sector enterprises should rule the commanding heights of the economy. But, as the Soviet model of development, on which Mahalanobis had founded the Nehruvian economy – a trend that accelerated under Nehru’s daughter – began to crumble, India awakened into the dawn of liberalization in which the old shibboleths were unceremoniously jettisoned. Privatization and globalization, de-control and disinvestment, competition and entrepreneurship became the new magic watchwords as India hurtled headlong into policies applauded and egged on by the World Bank and the International Monetary Fund.
That was a heady period in which “world’s second fastest growing economy,” and “India Shining” became catch phrases for politicians and promoters of the new Indian dream that included a bulging, white goods-consuming middle class. Then followed the worldwide recession in which the US and European economies took a beating, their banking and financial systems crashed, and the unemployment lines grew longer and longer.
This crisis – which India mostly escaped because of its continued public spending and stricter regulation of banking and trading activities, stable agriculture, and a continuously growing domestic demand factor – nonetheless focused attention on “left of centre” economists like Nobel laureate Amartya Sen who emphasized that economic growth without inclusiveness and social growth was not economic growth at all but a mirage of numbers. He also emphasized the role of the public sector in boosting growth with justice and reducing disparities. This thinking spread rapidly in countries like the US and the UK where “nationalization” and massive government subsidies and spending, even at the risk of humongous monetary and fiscal deficits, were considered a more acceptable alternative to a full-fledged depression.
In India, the crisis forced a re-thinking on unbridled privatization of PSUs and blind disinvestment. This is not an argument supporting PSUs that are a drain on the public exchequer or a playground for babudom and political patronage. It is rather a case for seriously examining the social role the public sector can play –given the huge investment in it of the nation’s scarce resources – as well as for modernizing it and making it as profitable and efficient as the best of any American, Indian, or European private corporation.
That is why Naresh Minocha’s cover story on ONGC – the nation’s first oil explorationgiant – is an important learning experience. It details the great potential that a PSU like ONGC has for the public good and for catalysing a vibrant economy as well as the waste and mismanagement and deliberate manipulation by politicians and bureaucrats that are sacrificing its remarkable potential at the altar of vested interests.
No comments:
Post a Comment