Commentary/Vir Sanghvi

Is it any wonder that liberalisation is on hold and foreigners are confused?

Unfortunately, we will not be able to make up our minds one way or the other if the debate is waged solely on the streets of Bangalore or in the sleepy conclaves of the Deve Gowda government.

There are issues involved here. There are arguments for and against. And yet, they hardly ever come up. The entire debate is conducted at the level of knee-jerk responses, blind xenophobia and public spectacle.

It is not my case that all foreign investment is necessarily a good thing and that it should always be welcomed. Equally, I think it is foolish and primitive to keep shutting out foreigners out of some misplaced jingoistic sentiment.

But the discussion is rarely conducted at the level of facts and ideas. Let's take one instance -- the Tata-Singapore Airlines tie-up -- which most of us probably favour at some intuitive level.

There are powerful arguments for the new airline. We all agree that Indian Airlines must be challenged by powerful competition if it is to improve its standards. And it is as clear that most entrepreneurs are not up to running a national airline. They don't have the funds and they don't have the expertise.

S K Modi is struggling to get ModiLuft aloft again; Parvez Damania made a mess of his eponymous airline; and the Khemkas of Madras have made an even bigger mess after renaming it NEPC Skyline; Sahara is a vanity venture; and the others have all crash-landed.

The exception is Jet Airways. This is partly due to Naresh Goyal's brilliance as an aviation man. But it is also because 40 per cent of the airline is owned by Gulf Air and Kuwait Airways, which gives it a certain solidity. So, wouldn't the Tata-Singapore Airlines replicate Jet Airways success?

But there is also a case in favour of keeping Singapore Airlines out.

Do we really want a foreign airline taking over all our profitable trunk routes? Singapore Airlines has no shortage of planes and can afford huge losses. Once you let a well-heeled foreign airline in, you are effectively killing off the smaller domestic players and slashing open the arteries of your principal national carrier.

Once the airline is established in India, it is certain to use its domestic services in a manner that serves the interests of its international parent (Singapore Airlines). Flights will be timed to connect with Singapore Airlines's international services. And it is only a matter of time before it asks for the right to fly on international routes -- Air-India uses only 50 per cent of the bilaterals it has been allotted.

Nobody disputes that all of this will give the passenger an airline that is better than either Indian Airlines or Air-India. And of course, this is a desirable aim. But is it desirable enough for us to risk killing off our own airlines and handing the skies over to a foreign carrier?

I don't know. And the reason I don't know is because there has been so little debate on this issue. Even we, in the media, have never gone beyond the lobbying and behind-the-scenes intrigue for and against the proposal. Rarely have we covered the issues involved.

The same is true of all foreign investment. No matter how great the uproar, how high the stakes and how important the scheme, we always let passion and prejudice get the better of reason.

Is it any wonder that liberalisation is on hold and foreigners are confused? Their confusion is nothing compared to our own.