Privatising Indian Railways, And Other PSUs

We on this forum have been campaigning for dismantling of Socialism and complete separation of economy and State in India. We believe that Freedom of Trade, and Right to Private Property, are God given fundamental rights. Therefore the State must work on the principle that everything that is not prohibited is permitted. A citizen must not have to approach State to obtain any license/permit/quota/clearance to start any business that has not been declared illegal. Environment can be taken care of by pre decided standards of emissions and effluents, and by pre demarcated areas where specific businesses can not be set up.

We also believe  that by the very nature of government on the one hand, and business on the other, a government can never run a business efficiently. A government run business will always lead to inefficiency, poor services, shortages, losses, and corruption. Because 1. no examination in the world has been devised that can select entrepreneurs, 2. government officers can not be given powers which are required in a business to make quick and on the spot decisions, and 3. the consequences of decisions made by the government officers will not be borne by them, but by the tax payers, and that leads to decisions being vitiated, not made on purely business considerations.

Still, we also believe that at this stage, privatisation of PSUs is wrong and counter-productive.

There is no aberration, no contradiction, in these two seemingly conflicting positions. We are working to achieve that the government should have only Army, Courts, Police, Roads, and Irrigation, and that’s all. What we are saying here is that destroying Railway, a great functioning department, is no economic reform. Selling PSUs is no economic reform. No movement whatsoever has been seen toward dismantling license/quota/permit/clearance Raj during the rule of present government also.

In fact the government that is dreaming of selling Indian Railways has not been able to gather courage to raise passenger fares even once during its tenure. What was raised initially was already approved by the previous government on files. For last ten years, passenger fares have not been raised. Whereas on expenditure side, even staff cost increases by about 8% every six months. Certainly if we do not match expenditure and cost for the sake of political expediency, how do we go for outright sale of the same system?

What passes as private sector in India is a cabal of folks who have mastered the art of bribing politicians & bureaucrats and stealing taxes. They are protected from new and real entrepreneurs by the license/quota/permit/clearance regime. Those who are not able to quickly learn to pay bribes, soon see their dream of starting a business go up in flames. In NOIDA, an area specifically marked for businesses, grown up men, men in fifties, can be seen weeping bitterly in government offices because even after paying all those bribes and making hundreds of rounds, they were not getting permissions. Because they made the mistake of thinking of starting a business in India.

Completely separate economy and state. To start a business a person must have to approach government for nothing, so long as that business has already not been declared illegal. Let the genuine private sector develop in India. PSUs will wither away on their own, without causing any disruptions. It is the most ridiculous thing to say that country can continue to be a socialist place, but Railways, or other PSUs, can be private. It must take a blindness of first order not to see the contradictions of it all. What will happen is that we will have fly by night operators, the cronies, who would get the assets at throw away prices, will sell them at windfall profits next day, and will then run away, leaving the Railways and other PSUs fully decimated.

India badly needs economic reforms. But economic reforms mean sending home those 54 inspectors who lord over our businessmen, to fully abolish all licenses, permits, quotas, clearance requirements. Economic reforms mean establishing rule of law and sanctity of contracts. Once this is achieved, India will see a true economic flowering, and then gradually all PSUs can be hived off, and nobody will notice, nobody will protest.