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August 16, 1999


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Business Commentary/Bibek Debroy

Why the government should not be in business

The phrase "government system reforms" covers a very wide canvas. In the space of a column, I, as a citizen, can only convey my anguish about some aspects of the government's functioning in the form of a letter.

"Dear government,

1. There are several statutes enacted in the name of protecting the poor. The Prevention of Food Adulteration Act ,1954 is an example. In Section 2(1)(f), adulteration is defined as "if the article consists wholly or in part of any filthy, putrid, rotten, decomposed or diseased animal or vegetable substance or is insect-infested or is otherwise unfit for human consumption." In Himachal Pradesh, you find three dead insects and one dead insect larva in a sample of flour (maida) and the Court holds that three dead insects and one larva do not amount to "infestation". Besides, an "insect" has to be an adult and a larva is not an adult. I am not concerned about subtle differences between the executive, the legislature, and the judiciary. To me, all of it is the government. How are you protecting me?

2. This is not an isolated example. Take Rule 22-A of the PFA. This states: "Where food is sold or stocked for sale or distribution in sealed containers having identical label declaration, the contents of one or more of such containers as may be required to satisfy the quantity prescribed in Rule 22 shall be treated to be a part of the sample." So someone drinks Gold Spot. Obviously, he cannot find out that the Gold Spot is adulterated without opening the bottle first. What do you mean by saying that adulteration cannot be proved because the Gold Spot bottle has been opened and is no longer in a sealed container?

3. Yet you waste everyone's time by trying to determine differences between "dairy toffee" and "milk toffee".

4. You prosecute poor Nabi Hasan. To refresh your memory, Rule 44(b) of PFA states, "... no person shall either by himself or by any servant or agent sell… milk which contains any added water." Nabi Hasan was not selling adulterated milk. In a road-side tea-stall, he mixed milk with water and put it onto boil to make tea. You convicted him.

5. You have something known as the Essential Commodities Act. This was a temporary statute under the Defence of India Rules, 1939 that you permanently placed on the statute books in 1955. Through various amendments, you also added to your original powers. So now, essential commodity means "(I) cattle fodder, including oilcakes and other concentrates; (ii) coal, including coke and other derivatives; (iii) component parts and accessories of automobiles; (iv) cotton and woollen textiles; (iv-a) drugs; (v) foodstuffs, including edible oilseeds and oils; (vi) iron and steel, including manufactured products of iron and steel; (vii) paper, including newsprint, paperboard and straw board; (viii) petroleum and petroleum and other products; (ix) raw cotton, whether ginned or unginned, and cotton seed; (x) raw jute; (xi) any other class of commodity which the Central government may, by notified order, declare to be an essential commodity". I am not convinced that all these commodities are still plagued by shortages? But using ECA, you continually harass me.

6. A dairy in Rajasthan wants to "export" milk to another state. Through the Rajasthan Milk (Export Control) Order, 1984, you will not permit the dairy to do this. The only organisation that will be permitted to do this is your organisation, the Rajasthan Co-operative Dairy Federation Limited, Jaipur.

7. For four years, Murarilal Jhunjhunwala in Bihar tried to obtain a licence. The Licensing Authority accepted his licensing fees, they did not ask him for any additional documentation. Nor did the Authority reject his application. After waiting for four years, Jhunjhunwala began the business without the licence and you come along and prosecuted him under ECA.

8. Have you ever considered what happens to people like Bhagabat Mishra? He lives in Nimapada Block in Orissa. He applied to the Block Development Officer and Executive Officer for a permit to get 1 kilo of sugar, 1 kilo of palmolein oil and 1 litre of kerosene. The EO said that issuing a permit was the BDO's job. The BDO signed a permit and sent Bhagabat Mishra to the Inspector of Supplies and on five successive days, the IoS was not available. So Bhagabat Mishra did not get his sugar, his palmolein oil and his kerosene.

9. You run a ration shop (provision store) known as Garib Bhandar in Behala, Calcutta. Rapeseed oil is supplied to Garib Bhandar by the West Bengal Essential Supplies Commodities Corporation Limited. That is also your concern and the Food and Supplies Department (also your concern) controls both Garib Bhandar and the West Bengal Essential Supplies Commodities Corporation. Are you aware that several consumers fell ill and were paralysed because of supplies of adulterated rapeseed oil? Instead of simply compensating them, you went about blaming each other about who was responsible.

10. You run all the insurance companies. Have you ever tried to get back money from an insurance company, either life or general insurance? I know what it entails, so I don't bother about insurance, unless it is mandatory, as with automobile insurance. Unfortunately, several of my fellow-citizens are not that wise. There was a gentleman with a poultry farm and he insured 1,050 chicks and also paid the premium. He received a policy for the period September 8, 1989 to June 29, 1990 and the birds died in a cyclone on May 10, 1990. When he sends a claim, New India Assurance tells him that chicks can only be covered for 72 weeks, that is, till April 15, 1990. Mind you, New India Assurance did not think of this when accepting the premium or when accepting the policy.

11. Until recently, you used to run most banks. At my public sector bank, I would have to wait for one hour to take out money that was rightfully my own. And even when I got my money, it would be given to me as an act of great favour. Have you ever tried to unstaple bundles of torn fifty rupee notes, which no one will accept thereafter? Anyway, I have now switched to multinational and private Indian banks. These have ATMs, don't go on strikes and deliver crisp notes. But not everyone has access to these. Deepak Mishra is an example. Deepak Mishra was paid his salary through an account payee demand draft issued by State Bank of India, Hyderabad. He works in Cuttack and deposited the draft in State Bank of India, Cuttack. The draft was dishonoured because SBI-Hyderabad had forgotten to sign the demand draft. The Branch Manager in Cuttack not only did not help, he said, "It is your responsibility to collect the draft in order from the issuing branch as one should be careful while purchasing goods from a shop."

12. You still run all the trains. People pay for air-conditioned travel and are saddled with ordinary compartments that don't have water and electricity.

13. Most citizens in urban areas try to avoid post offices just like they try to avoid public sector banks. Couriers are better. However, avoiding post offices is not always possible. If I buy a National Savings Certificate in Bareilly, it takes me months to get it paid in a place like Delhi.

Any answers?

Bibek Debroy

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