Economic Highlights
New Delhi, 20 January 2020
UN
on Privatisation
INDIA’S
POOR WORST HIT
By Shivaji Sarkar
India’s policy of privatisation is contrary
to the observation of the United Nations and the World Bank. India is bracketed
by the WB among the five countries with the largest number of poor and says it is
home to 23.88 per cent of the world’s poor. The UN observes that widespread
privatisation of public goods is systematically eliminating human rights protections
and further marginalising those living in poverty.
Indian policy makers normally take note of UN
reports. The ensuing Central budget would be interesting to observe how it is
dovetailed into it. More so as the UN report questions the Niti Aayog move to
legitimise Public-Private partnerships (PPPs) and private entities charging user
fee from the poor.
Now many more infrastructure projects are
based on high fees on infrastructural use, including the railways, roads, metro
and other transport modes. The move to “privatise” trains run by the Indian Railways
(IR) also classify into this segment.
A careful look into the train privatisation
indicates that these would be run by the IR subsidiary IRCTC but would charge
exorbitant fares and also deny concessions to senior citizens, cancer patients
or other needy. The fare structure is deceptive.
The UN questioning discrimination
criticises the “user fee” model as it finds infrastructure projects most
attractive to private players. The construction cost is relatively low and high
“user fee” charged. Such projects include water, sanitation, electricity (even
pre-paid meters), roads, transport, health care, social and financial services.
The poor are the worst hit as they are unable to pay and cannot afford many
services. It means they would have inadequate and not so good services.
There is some
improvement in health care after Ayushman Bharat. The PM Kisan pensions give
some relief to farmers. But MUDRA loan type schemes have not been found to be as
beneficial as major part of it have turned in to NPA.
In a TERI
University study, LN Venkatraman says that the State is neither ensuring
welfare nor bothers to be a service-regime. He says, “The epitomes of progressive taxations;
universal basic income; food bank and social insurance become Robinhood
idealism in this complex dualism. Meritocracy as an efficiency argument
theoretically justifies the elimination of redistributive policies. This, in
turn, dilutes the disposition of “collective bargaining”.
The UN admits that the WB, International
Monetary Fund and even the UN itself aggressively promoted widespread
privatisation of basic services without regards to the human rights
implications or the consequences for the poor. The UN says
that privatising social protection, education and other essential public goods
cannot be done at the expense of throwing out rights protection.
India followed the
prescription rigorously since 1991. It now reflects in severe rural, urban,
farmer and working class distress. More so as job losses are reaching record
proportions owing to ill economic health of many industrial units though still
corporate profits are growing.
The UN observations
are significant. Teeming millions are finding high-cost private education unaffordable
and also mostly sub-standard. The private universities or institutions are
delivering without proper faculty, labs and other necessary basics. It raises
the question whether the State should withdraw totally from education.
Interestingly, the regulators are suspicious of their quality.
The poor are no
more finding the IR trains affordable. Dynamic fares, exclusionary tactics have
made travel difficult for the poor. Discriminations have increased the social
gulf. It calls for Niti Aayog to institute studies so that the NDA that has
been given massive mandate could do necessary course correction.
In this context, it
is necessary to review the recent decision to sell the government’s entire stake
in the second-largest refiner Bharat Petroleum, Shipping Corporation of India,
Container Corporation and privatise railways or trains.
The motivation is
simple. Crisis is brewing in the economy. Finance Ministry is finding it
difficult to manage the rising costs due to high inflation, now at 7.35 per cent
on the back of rising food prices and artificially kept high petroleum prices.
The government
advisers are yet to realise that most government introduced price hikes are
hitting the government most as its expenses are rising phenomenally and it is
forced to divert funds to run daily chores at the cost of development.
Indian exports have
also shrunk 2.2 per cent and imports 8.8 per cent on January 15 as WTO observes
sharp fall in global trade. Trade deficit narrows to $ 11.25 billion.
Overall it may lead
to GDP contraction. But the experts now are in dilemma over the impact of GDP
on the poor. A rising GDP is not helping improve lifestyle or create jobs. The
slowdown is of course a double whammy.
The UN report
quotes a study by the National Audit Office of the UK. It concluded that
private finance initiative model had proved to be more expensive and less
efficient in providing hospitals, schools and other public infrastructure than
public funding. It finds cost of privately financed hospitals are 70 per cent
higher than public sector hospitals.
Another study by
the European Court of Auditors of the EU found widespread shortcomings in 12
PPPs in France, Greece, Ireland and Spain in road transport and IT and benefits
were limited.
The UN
prescription looks good but India may not find it easy to stop privatisation,
though its benefits have been limited. The government is keen on selling many
of its Rs 1.02 trillion assets as its tax collections are less than estimated.
The last quarter cut of 25 per cent of budgetary allocations may in theory
reduce fiscal deficit but practically it can carry on much of its expenses to
the next financial year.
Changing course
all of a sudden is not easy. But the government has to ponder whether the much
touted benefits of privatisation are real or not. If it accepts the UN
prescription, it has to go for an overall alteration of policies, redraft the
path and usher in a new economy.
The UN
scepticism on privatisation is based on the deprivation the rights and benefits
of the poor. It is apprehensive of the growing discrimination and says, “There
is a real risk that the waves of privatisation experiences to date will soon be
followed by a veritable tsunami”.
It is not clear if it is a warning or not. But
developing countries would do well to listen to it and accelerate progress and bring
down costs to help people and ensure growth.---INFA
(Copyright,
India News & Feature Alliance)
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