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August 2, 2001
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'These are not crown jewels, these are bleeding ulcers'

Ramesh Menon's interview with Union Minister of State for Divestment Arun Shourie continues.

Part-I: 'Everything in India has become dysfunctional'

Arun Shourie, Union Minister of State for DivestmentThe former chief of Air-India, Michael Mascrenhas, was removed recently. Was it because he was not towing the government line on divestment?

I do not know that one at all. But as far as I know, he was one of the strongest advocates of divestment. The management under him was one of the few managements in the country in an enterprise which held conventions and seminars of their own staff to support divestment.

Some of your Cabinet colleagues like Sharad Yadav differ from you on the divestment issue. For example, he is in favour of buying more aircrafts, shoring up the airline and then selling it off.

Actually, as I understand it, the position is not that at all. Sharad Yadav is a member of the Cabinet Committee on Divestment. He is a party to this decision. He participated in meetings. We had a meeting with all the seven unions of Air-India and top management. I requested the press to be present at the meeting.

Sharad Yadav also endorsed what was being done and said unambiguously that this had to be done to save the airline.

Ajit Jogi was in the forefront of the Balco agitation, but he is now interested in selling numerous public sector units in Chhattisgarh.

He will take credit for both.

Tum meri haan ko haan na samjho,
Tum meri na ko na, na samjho,
Yeh koi aur hi bol raha hoga,
Meri zubaan ko zubaan na samjho.
Is zubaan ko, meri zubhaan na samjho.

(If I say yes, do not take it as a yes / If I say no, do not take it for a no / Somebody else must be saying this / Do not take my word to be my word / Do not take this to be my word).

So what can I say about Ajit Jogi?

So politics is creeping into all these issues.

But is this politics? This is ruin.

We have lost out on time. The loss inflicted by completely misguided rhetoric and allegation mongering in the Balco case was Rs 2 billion on the plant itself.

No one looks at that. The same build up you can now see with Air-India. So, the two bidders you now have will also walk out. So, Air-India will bleed to death. This is the objective of many competitors of Air-India. That it dies and they take over the bilaterals and other lucrative market in India.

This is exactly what is happening. Politicians and journalists are available to carry out the conspiracy.

Jogi was saying that the government could have got much more money from Balco.

He said that the plant is worth Rs 50 billion. We said we have sold 51 per cent of the equity so let him get us Rs 25 billion from somebody. It is all just gas. Hot air.

Most of the voluntary retirement schemes offered by the units are meeting with a poor response. Most of the units are heavily overstaffed.

Well, in the banks they have been fantastic. But, these schemes can help only to the point where the enterprises and the government can afford them. It is a voluntary decision. If you do not take it, the enterprise will die sometime.

We should not be disturbed by closure of firms. That alone will awaken people to the fact of life that the alternative to privatisation is closure.

What is happening on the Maruti front?

Discussions have been held with Suzuki. A roadmap has been agreed upon. That is lying with the ministry of heavy industries since January this year.

January? Why is it not moving?

Best to check with the ministry of heavy industries. The enterprise is under their control.

How receptive are other ministries to divestment? Sometimes, it seems that you are standing and working on an island.

In America, they say, I will take the fifth. That is the Fifth Amendment, which says that you will not be compelled to make a statement that can incriminate you. I will not answer this question.

What is the kind of backlash that may come after public sector units are divested?

There will not be that much of a backlash if governments communicate more. We have to saturate people's minds with the reality of the public sector's condition.

But that is not such a difficult thing to do.

Television does not do it. Our journalists do not do it. So people are confused. Actually, some think that family silver is being sold when, actually, these are not crown jewels, these are bleeding ulcers.

As public perception is not there, it is easy to stoke people's anger. So all governments fear the consequences. They have to come to power through votes of people who have been misled. Naturally, they are hesitant.

What are the kind of reactions India is getting internationally to divestment? Has the slow process of divestment in India impaired India's image about being able to undertake bold economic reforms.

It is certainly beginning to affect the perception that though India is committed to reforms, things do not move fast enough.

Investors are not going to wait for us to solve our problems. Indian politicians and the Indian Civil Service is so satisfied in entangling each other or going through the motions. We should wake up.

Competition is hotting up in the marketplace and do we not need to move faster?

Percy N Barnevik, head of ABB, who restructured the organisation, said at a meeting of the World Economic Forum that we should stop competing with ourselves of yesterday. You have to compete with other countries of today, if you want to become an investment destination.

If we cannot compete with China in India, how can we compete with China in the rest of the world? We must act with the urgency of a man whose rear is on fire.

What about wastage?

In the 9th Plan, the states were to contribute only Rs 38 billion out of an outlay of 1,350 billion. We are in the final year of the 9th Plan. They have contributed Rs minus 1,150 billion!

In the last three years, 13 state governments have come to a stage where they could not pay salaries. In one state in north India, the treasury remains open for only two days in a month just to pay salaries.

Manipur's total revenue is equal to 15 days of salaries that it pays in the entire year. In the central government, interest on past debt is almost 70 per cent of the total revenue. What is the result. All development expenditure, all defence expenditure, pensions, all salaries are being paid on borrowed money.

The salaries itself work out to Rs 370 billion. Is this not something that should be drilled into people's minds?

This is shocking.

I have said this before in Parliament. But all that happens is that they all complement me outside Parliament. They do not do anything.

The same people will start shouting next day against divestment. We are divorced from reality. We have become completely dysfunctional. We are not committed.

How long can this go on?

Arun Shourie, Union Minister of State for DivestmentIt can go on forever. We are a large country, which is our strength. But it puts us to sleep. We do not see a cumulative result of all this.

Look at Indonesia. Ten years ago, it was one of the success stories. Look at it today. The way we are going in parts of India like Assam, Bihar, north-eastern states; we can see that there is no bottom. People have to be awakened to it.

What is the single thing that you will do if you could?

To improve the quality of public expenditure.

We spend Rs 400 billion a year on removing poverty.

The secretary of the Planning Commission said that there are 50 million families living below the poverty line.

So if we abolish anti-poverty programmes in India and just sent that money to families, they would get at least Rs 8,000 per family per year which could get them more than two kilos of rice everyday.

We spend so much money but the poor are where they are. If we axe an anti-poverty scheme as it is being wasted, the shouting will be that we are anti-poor.

What is your biggest challenge?

Even the maximum assertion by many people will not be enough to change the country in time. It is like reforming the ocean with toothpicks in your hand. You cannot change the shape of the ocean with that.

As a citizen, I feel all of us should awaken people to the truth. It is now or never.

'There is a general political consensus on divestment'
Workers' interest in Balco would be fully protected: Shourie
Full transparency in PSUs valuation: Shourie

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