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September 11, 2002
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The Rediff Interview/ Jairam Ramesh

'The issue is not risk or monopoly; the issue is Reliance'

Jairam Ramesh is secretary of the Congress party's economic affairs department, deputy chairman of the Karnataka State Planning Board, economic advisor to the Chhattisgarh government, member of the economic Rajasthan Development Council, and serves on numerous other committees.

His sharp observations on economic policies have earned him nationwide acclaim. He was advisor to the finance minister during 1996 to 1998, advisor to the deputy chairman, Planning Commission from 1992 to 1994 and advisor to the prime minister in 1991. He has served in the Planning Commission, industry ministry and other government economic departments.

He has authored a number of key government reports in areas as diverse as energy, technology, capital goods, industrial policy and telecom. He was a key player in the team that formulated and implemented India's economic reforms in 1991 and 1997. He serves on the boards of a number of public institutions in India and abroad. He has been a founding member of the Indian School of Business in Hyderabad and is a member of the International Council of the New York-based Asia Society.

He studied public management at Carnegie Mellon University from 1975 to 1977. Thereafter he spent a year at the Massachusetts Institute of Technology studying technology policy, economics, engineering and management as part of the newly-established inter-disciplinary technology policy programme.

He obtained a B Tech in mechanical engineering from the Indian Institute of Technology-Bombay in 1975. In 2001, IIT Bombay presented him with the Distinguished Alumnus Award.

He has just written a book, Kautilya Today, on globalising India. "This book is a compendium of 200 columns I wrote between 1998 and 2002," Jairam Ramesh told Senior Editor Sheela Bhatt.

On the divestment controversy:

The postponement of the oil firms' divestment is unfortunate. The most outstanding success story of the last four years of the Vajpayee government has been the privatisation programme.

In the last 30 months, there have been 24 completed transactions of privatisation with a total value of $2.5 billion. It is a success.

It came after 20 years' efforts of trying to disown the public sector. From Rajiv Gandhi to I K Gujral, all leaders tried something. For instance, the Divestment Commission was set up by the United Front government. And the same commission was used by (Divestment Minister) Arun Shourie to push the process.

However, the Vajpayee government should be given full credit for taking privatisation to this level. They are the first people to use the word privatisation. They are not ashamed to use this word.

Unfortunately what has happened in the controversy over the divestment of HPCL, BPCL (Hindustan Petroleum Corporation Limited; Bharat Petroleum Corporation Limited) is that a lot of political and corporate bodies are lobbying around, because privatisation always hurts someone's interests.

In the case of the oil companies, it is more so. Questions are being raised whether it (the postponement of the HPCL, BPCL divestment) will stall the privatisation programme.

I hope the damage is restricted to HPCL and BPCL and privatisation in other areas continues. But that's easier said than done. Now every minister would dig in. One minister is now saying we should not privatise hotels because the Hotel Corporation of India is serving some social and strategic purpose.

Bureaucratic and political vested interests, which had prevented the public sector from being commercially successful, will now dig in and speak more against privatisation.

Now it all depends on Mr Atal Bihari Vajpayee and Mr L K Advani. In every privatisation there is a corporate war. The VSNL (Videsh Sanchar Nigam Ltd) controversy was the result of corporate war. When Mr Pramod Mahajan attacked the Tatas, undoubtedly there was a corporate angle to it. Mahajan was not doing it of his own.

In the case of HPCL and BPCL too, it is very easy to understand. Someone is talking about the security angle, George Fernandes is talking about strategic interest. This is all crap.

The issue is not of risk to security or of monopoly: the issue is Reliance. Look at the assumptions that are being made. Reliance will bid, and Reliance will win the bid, and buy out both HPCL and BPCL. These are all assumptions, nothing more.

The takeover of IPCL (Indian Petrochemicals Corporation Ltd) by Reliance is now objected to on the ground that it has led to a monopoly. There are many ways to break the IPCL monopoly, but the government has not done that. In that case, the government should bring down the import duty of the product manufactured by IPCL: that will end IPCL's monopoly.

In a capital-intensive industry, you break a monopoly not by setting up two factories, but by great policies. If the import duty is reduced on polythene, the market price will come down sharply by 12 per cent to 15 per cent. But the government is not doing anything about it.

In the case of refineries like BPCL and HPCL, Reliance is not the only company which will be bidding (when these State-owned firms come up for divestment). There are companies like Shell and other foreign companies, which could come in.

One of the characteristics of the Indian privatisation programme is that it is not able to attract foreign investors. No foreign company has bought a public sector unit.

I know for a fact that this time there would be foreign companies who would bid (for HPCL and BPCL).

But the whole controversy of HPCL-BPCL privatisation has been bogged down due to a pro- and anti-Reliance drama. There are ways of dealing with Reliance, as there are ways of dealing with a monopoly.

Just take the worst case scenario. The worst case scenario is Reliance buying both HPCL and BPCL. Even in that case Indian Oil will still control 54 per cent of the Indian oil market. So who says it's a monopoly? It's duopoly. They have to compete. The world over, you don't have 100 companies in the oil sector. You have only a few. And one way of dealing with it is that you deal with their abuse of market.

Suppose Reliance buys both HPCL and BPCL. By the way, I think this is an extremely unlikely prospect. Reliance might get one of the two, as there are ways in which the government can prevent Reliance from buying both.

The government should deal with the Reliance issue separately and the monopoly issue separately.

Mr George Fernandes is closely linked with the anti-Reliance lobby. To say Mr Fernandes is protesting against HPCL and BPCL sell-off is hog-wash. We all know what the link is between Mr George Fernandes and the anti-Reliance lobby.

Then there is a pro-Reliance lobby also. I am looking at this objectively. I don't think you can credit George Fernandes and other opponents of the sell-off of oil companies with great altruistic emotion.

On September 7, the anti-Reliance lobby won in stalling the oil companies' sell-off. Fernandes is a hypocrite when he claims a Socialist background and secularism, and then beds with the RSS (the Rashtriya Swayamsevak Sangh).

The BPCL and HPCL issue is merely a pro-Reliance and anti-Reliance issue. It's as straightforward as that. It shows that within the government opinions are divided. Also, people don't want this privatisation story to succeed.

Arun Shourie has antagonised everybody. Which means he is succeeding in his job. The entire political class would like to see the back of Mr Shourie because he is carrying on the privatisation programme in a transparent way.

No foreign investment has come in through privatisation because people didn't believe the Indian government is serious. Anyway, if they had come in, the Swadeshi Jagran Manch and the RSS would have objected to it.

Now that domestic companies are coming in, they (SJM, RSS) are talking about monopolies. You can't win with these guys any way.

Now after three years people have beginning to recognise India's success story in privatisation. However, the HPCL-BPCL sell-off postponement is a setback.

Perhaps, it's a setback for Mr Shourie too.

On his book, Kautilya Today

Basically this book is a compendium of 200 columns I wrote between 1998 and 2002.

I used to get lots of requests from school- and college-going students to get all information regarding globalisation and changes in economics in one place to help them in research work. I am aware there is a reluctance amongst publishers to make a book out of published columns. I have written these columns with a non-partisan view, that's why it got a wider audience.

It is not a Congress point of view. Here I am looking at politics from the economic viewpoint.

It takes a long time to write a column. I almost work for more than three days to get background material. First of all, you should know who your audience is. Who are you writing for? Are you writing for your friends? Or are you writing for an ego kick?

Most columnists in India write for senior government officials to read. They write to be noticed by the government. And they write in a language only they can understand.

I am writing for an ordinary person who wants to know more and more about economics.

I try to de-mystify economics and issues. It is not an easy thing.

I wrote articles on CTBT and privatisation which went against my party's position. My party would get very upset. I have written some articles in praise of Mr Vajpayee when he was a functioning prime minister, when he was not in the current Kumbhakarna phase. That got me in serious trouble.

In India, it's difficult for political personalities to be objective. By the way, the Congress does exactly the same thing when in power. What do you do when you are out of power is a political issue.

People expect you to tout the party's point of view.

In India, the level of awareness on economic issues is very low, but the level of interest is increasing fast. I would blame political parties for this. I think political parties have not made economic issues a part of their agenda and not done enough to mobilise people. I have to educate my own people too.

The last great communicator of economic issues was Jawaharlal Nehru. What a fantastic communicator he was! He talked about economic and social issues with great Úlan.

Now, at last, there is a thirst for debate on economics. The amount of mail I get is just one example. Incredible. People want to know. Indians want to be aware. They want to be educated on economics.

People like us who are privileged to serve in key positions should provide them what they want.

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