When Private Sector Sucks As Much As Public Sector In India


As an Indian living and working in US, I am interested in the political and economical development in both countries. In the US – since this is election season, there is a lot of rhetoric on the extreme sides of the spectrum. One side wants extreme role for government and another wants minimum possible government intervention. In India – it is different. Large government involvement is still the only agenda irrespective of political party affiliation- with privatization getting attention only since the 90s.

Pro-reform leaders like the Indian Prime Minister are all for privatization. One of the areas where there is significant privatization is in Infrastructure – specifically roads. BOT (Build,Operate,Transfer) is very popular for roads. The general idea is the government designs, and private part does building, collecting tolls for a period, and then transfer back to government.

In general – this is a good model, and I have always thought that is the only way to get India to develop faster. But I did not understand the perils of this approach till very recently. Here are 2 examples to make the point, both of which were brought out by an excellent program called “Asianet Newshour”.

BOT for roads is a scam of epic proportions in some cases. In one case – exposed by Asianet news hour – a private company just opened few other companies under different names ( using same office address)  and won contracts (probably with the required political blessings) for road contracts in Kerala. Next, they do a better version (for them , not for people) of BOT . They get money from government for part of the road, and then inflated the cost by a factor of 3 or 4. And even before roads are completed to specs – and not even putting streetlights – they have started collecting a good chunk of money as tolls. Worst case – there was an MLA on the program on TV- a guy elected by people to watch out for them – trying his best to defend the private company vehemently when he had all the facts thrown at him by rest of the panel.  Remember the 2G  scam ? this one looks to be in that league or worse.

Government had leased many farm/forest acres to private farmers in the past for cultivation, under strict norms. These farmers – including big companies that does farming of cash crops – were not supposed to change crops, sell, sublet or encroach adjacent land. Well, guess what – they did all of that and more. And the regulations are so outdated, that nothing much can be done to penalize their wrong actions. I was shocked to see a sting operation on “Asianet Newshour” that showed a communist party local leader explaining clearly the steps needed to claim acres of forest land in Kerala for private owners.  And another political leader is saying that the leased land should not be taken back by government when lease expires or when terms of lease are violated. And he will probably have his way too, given the coalition government cannot sustain without his party.

It is not that the government is doing something brilliant either.  After all these decades of winning independence from Britain – India is still not self sufficient on power. There was the largest ever power cut last week with hundreds of millions of people affected.  Most National highway stretches have 2 lanes at most.  There are plenty of restaurants that serve food that kills people or make them seiously sick. Very little is done to fix any of this with a long term perspective. Corruption is so common place that people barely complain any more. Look at Olympics – for a country with billion people – we have not even won a gold medal yet in London so far. We are still singing praises of Milkha Singh and PT Usha who came close to winning a bronze decades ago in athletics. We have no planning to make it any better next time either.

Anna Hazare had a huge fan following not that long ago. And where did he end up? He just announced his team will contest elections and reduce corruption. And at this point – hardly anyone is supporting his campaign. Why? simply because his team just bickered on every thing and could not put forward a plan that citizens of India could understand as viable.

So where does that leave India ? If neither private sector not public sector is the answer, what is the answer? is Luck the answer?

 

Advertisements

5 thoughts on “When Private Sector Sucks As Much As Public Sector In India

  1. Dear Vijay…
    I totally Appreciate your thoughts in this regard… And Anand has already given his view that Sometimes, Media/Press over states some information which may not be true..
    Let me give u some of the details in this regard, which u can also verify….
    1. a private company just opened few other companies under different names ( using same office address) and won contracts (probably with the required political blessings) for road contracts in Kerala.
    Please go to http://www.nhai.org website and see whether it is legal or not….. Not over in kerala, all over India, they can do it….. It is not a single company which is doing this, it is a consortium (joint venture) which needs to form an SPV (Special Purpose Vehicle) to operate the BOT system. This much details are available even in net and still ASIANET NEWS is spreading wrong information…..
    2. They have not mentioned about what is happening at the toll plaza area at all. The people opposing BOT had opened a parallel road in order to avoid toll plaza and destroy the BOT system also. No more road works are going to happen in Kerala.
    Vijay, U r sitting in US and we are living here…. Don’t believe the Channel 100%, as there are many many vested interests in many cases…..:)

    • Hello malayali

      I agree news channels try to make a bigger deal of things when they get a chance.
      About the multiple companies thing – sure it is legal. But only borderline. 99% with 1% owned by a possible nominee in all cases is not keeping with the spirit of the law. Especially when they have all the major contracts. Did I understand this wrong?

      2. This I did not know – but I agree that defeats the purpose of BOT. But there should be a middle ground where citizens interests are also protected, and company makes a reasonable profit. When the balance shifts – people do parallel roads etc which I don’t condone.

      You are right – I do live in US and don’t face this every day. But I do visit Kerala multiple times a year, and have seen some of these road problems first hand.

      But I do agree with you – trusting the channel 100% is not good.

      Many thanks for commenting

      Cheers
      Vijay

  2. Hi Vijay – India has been like this from Independence, nothing moves fast. That’s the disadvantage of Democracy. But believe it or not, India has best experience leaders today then ever. Take average age of our Central Political group, no world has so many senior leaders with such a level of experience. Even with all good intention, they have to fight which is good for democracy in Long run ( So only FII’s like India a lot compared to any other country .. )

    Regarding the Anna Hazare movement, yes they have bickered — but think from their angle, did they had any other option?

    It’s a debatable topic, but at least India is not that worst when compared to other countries. In India, everything is transparent, nothing hidden from Media ( Sometimes, Media/Press over states some information which may not be true.. )

    • Hi Anand

      I agree with the tendency to overstate the issues.

      I honestly am not a fan of the average age being so high in the parliamentary leadership. On one hand they are experienced, but on the other hand they make sure no new idea can surface from elsewhere.

      World over, regional interests trump national interest – but in India, it is taken to an extreme. Look at that poor Railways minister who had to resign because Mamta Banerjee didn’t like what he said?

      Large government and planned economy did not work out in India all these years like the founding fathers expected. Why would it work now?

      Debatable topic indeed – and many thanks for providing your perspective

      Cheers
      Vijay

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s