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COVER STORY: UNION BUDGET
PRIVATISATION
"We've approved privatisation
in 27 PSUs."
Sinha's budget commitment
GOOD ECONOMICS: It
doesn't take a chartered accountant to tell that over Rs 23,000 crore
of public investment in PSUs earning a meagre 2 per cent annual return
is a dead waste and should be taken off as quickly as possible. Especially
since attempts at making good businesses out of most PSUs have failed
in the past 15 years. On this yardstick Sinha's Rs 12,000 crore disinvestment
target for 2001-02 may look modest. After all, Sinha claims that just
three of the 27 PSUs ready for privatisation-Air-India, Maruti Udyog and
VSNL-can fetch him the targeted amount. Comments Venugopal Dhoot, chairman,
Videocon: "I am confident that the Government will more than achieve
its target because the process of bidding and evaluation has matured to
a great extent."
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| WAITING FOR TAKE
OFF: Ten years of reforms later, privatisation is yet to get going
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RISKY POLITICS: The frayed political
tempers over BALCO, the only PSU to be disinvested in 2000-01, is just
one evidence of what a non-starter disinvestment has been through the
past 10 years. Sinha's predecessors consistently aimed big and achieved
little, hampered as were by labour and political protests. Sinha's own
party-the BJP-too had joined in some of these protests. Quips Singh: "The
paradigm of economic policy the Congress put in place 10 years ago is
now accepted by those who criticised it when they weren't in power."
That hasn't stopped Sinha from trying to build a consensus, even if this
proves more difficult than winning the BALCO vote in the Lok Sabha.
LABOUR REFORMS
"Changes in labour laws are necessary."
Sinha's budget commitment
 GOOD
ECONOMICS: Because non-exit policy for labour has actually meant non-exit
for industry. If labour can't be sacked how will a company shut down?
And if companies that must die aren't allowed to die, trapping many productive
resources with them, they hinder the growth of new companies and new employment.
So while India's rigid labour laws have ensured job safety for existing
workers, they have choked the growth of new employment. What Sinha has
proposed is just a baby step towards larger labour reforms. Says S.P.
Oswal, chairman, Vardhman Spinning: "If this gets scuttled, there
will be serious problems." The scheme to abolish the Banking Services
Recruitment Board (BSRB) should begin the process of professional management
for PSU banks. The coveted posts of probationary officers may fade out
as banks opt for more informal campus recruitments.
| Labour Reforms Proposed |
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# Companies employing 1,000 or
more workers will be allowed easier layoffs of surplus workers
# Severance compensation to be increased from 15 days' salary to 45
days' salary for every year of service
# Labour laws to allow for outsourcing of workers and lift restrictions
on contract appointments
# Industrial Disputes Act and Contract Labour Act to be amended to
allow for labour reforms
# A new insurance scheme to provide 30 per cent of the last drawn
salary for a year to those out of jobs |
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RISKY POLITICS: Labour, like agriculture,
has been a hotbed of populism. Objects Samajwadi Party chief Mulayam Singh
Yadav: "New labour laws will allow employers to lay off indiscriminately.
Abolition of the BSRB will end the reservation in bank jobs." Warns
K.L. Pathela, president, BMS: "We will oppose the changes tooth and
nail." So will youth, particularly in the backward states, for whom
the BSRB is a favourite job opportunity. Just admitting the need for an
overhaul of labour laws maybe the most the political class can stomach
this year.
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