privatization - Overview, Types of Privatization/Methods of Government Disinvestment
The return to private ownership of organizations formerly owned by the state. The government issues shares in the company to be privatized, and offers them for sale to the public. The company therefore becomes answerable to the shareholders and not to the government. Several cases of privatization took place in Britain in the 1980s, including British Telecom and British Gas. The government was able to raise considerable sums of money by this means, thus helping to reduce its borrowing requirements and cut tax rates. The privatization of certain public-sector utilities such as the railway system has led to criticism of the companies' safety procedures in favour of cost-cutting.
Privatization (alternately "denationalization" or "disinvestment") is the transfer of property or responsibility from the public sector (government) to the private sector (business).
Overview
Although there is a large middle-ground between these polar positions, the pro and con ideologies pertaining to privatization are these:
The Pro-Privatization Argument Synopsis
Proponents of privatization believe that private market actors can more efficiently deliver any good or service than government can provide. Privatization proponents' faith in the market is philosophically based in an economic principle of competition: that where there is a profit to be made, competition will inevitably arise, and that competition will inevitably draw prices down while increasing efficiency and quality. By the same principle, privatization proponents feel that government lends itself to waste because it has no competition. A related argument for privatization says that it is preferable to maximize the number of social arenas open to entrepreneurship- charging government with robbing would-be entrepreneurs, and society at large, by meddling in the market.
The Anti-Privatization Argument Synopsis
Opponents of privatization believe certain parts of the social terrain should remain closed to market exploitation in order to protect them from the unpredictability and ruthlessness of the market (such as Private prisons).
The controlling ethical issue in the anti-privatization perspective is the need for responsible stewardship of social support missions. Privatization opponents believe that this model is not compatible with government missions for social support, whose primary aim is delivering affordability and quality of service to society. Opponents also would claim that many of the utilities which government provides benefit society at large and are indirect and difficult to measure. As a result, many functions which government provides, such as defense, have been historically identified as being unproductive and unable to produce a profit.
Many privatization opponents also warn against the practice's inherent tendency toward corruption. As many areas which the government could provide are essentially profitless, the only way private companies could, to any degree, operate them would be through contracts or block payments.
Some would also point out that privatizing certain functions of government might hamper coordination, and charge firms with specialized and limited capabilities to perform functions which they are not suited for. In rebuilding a war torn nation's infrastructure, for example, a private firm would, in order to provide security, either have to hire security, which would be both necessarily limited and complicate their functions, or coordinate with government, which, due to a lack of command structure shared between firm and government, might be dificult.
There are various precedents in history which some would claim as examples in which improper privatization, or the failure of government to conduct certain functions, caused various complications. In the 18th Century, military functions such as maintaining forts and garrisons along the African coast were, in effect, privatized to the East India Company, with parliament obliged to pay 13,000 pounds a year to support the East India Company in this end. In the reconstruction of Iraq, the government decided to contract out many different reconstruction functions to private firms. The uncoordinated action between private emergency relief agencies, as well as the military (which would often turn back relief trucks) resulting in the poor response to the storm that many would claim was a result of this privatization.
Types of Privatization/Methods of Government Disinvestment
There are three main methods of privatization:
Share Issue privatization (SIP) - selling shares on the stock market Asset Sale privatization - selling the entire firm or part of it to a strategic investor, usually by auction or using Treuhand model Voucher privatization - shares of ownership are distributed to all citizens, usually for free or at a very low price.
Share issue privatization is the most common type. A political government may only be motivated to improve a function when its poor performance becomes politically sensitive, and such an improvement is easily reversed by another regime. Conversely, the government may put off improvements due to political sensitivity and special interests — even in cases of companies that are run well and better serve their customers' needs. A political government tends to run an industry or company for political goals rather than economic ones. Privately held companies can more easily raise investment capital in the financial markets, investment decisions are governed by market interest rates. Poorly managed state companies are insulated from the same discipline as private companies, which could go bankrupt, have their management removed, or be taken over by competitors. Private companies make a profit by enticing consumers to buy their products in preference to their competitors'.
The basic economic argument given for privatization is that governments have few incentives to ensure that the enterprises they own are well run. As Governments may borrow money more cheaply from the debt markets than private enterprises, they will squeeze out more efficient private companies through this misallocation of resources.
Where governments lack it, it is said that private owners do have profit motive. Ideally, privatization propels the establishment of social, organizational and legal infrastructures and institutions that are essential for an effective market economy.
Privatizing a non-profitable (or severe loss-making) company which was state-owned would shift the burden of financing off taxpayers, as well as freeing some national budget resources which may be subsequently used for something else.
The main political argument for privatization is that of civil liberties and privacy.
Anti-Privatization
Opponents of privatization dispute the claims concerning the alleged lack of incentive for governments to ensure that the enterprises they own are well run, on the basis of the idea that governments are proxy owners answerable to the people. It is argued that a government which runs nationalized enterprises poorly will lose public support and votes, while a government which runs those enterprises well will gain public support and votes. Thus, democratic governments do have an incentive to maximize efficiency in nationalized companies, due to the pressure of future elections.
Furthermore, opponents of privatization argue that it is undesirable to transfer state-owned assets into private hands for the following reasons:
Performance. the government is motivated to performance improvements as well run businesses contribute to the State's revenues. The public does not have any control or oversight of private companies. The government may seek use state companies as instruments to further social goals for the benefit of the nation as a whole. If a government-owned company providing an essential service (such as water supply) to all citizens is privatized, its new owner(s) could lead to the abandoning of the social obligation to those who are less able to pay, or to regions where this service is unprofitable. Privatization will not result in true competition if a natural monopoly exists. Governments may more easily exert pressure on state-owned firms to help implementing Government policy. Private companies often face a conflict between profitability and service levels, and could over-react to short-term events. Private companies do not have any goal other than to maximize profits. A private company will serve the needs of those who are most willing (and able) to pay, as opposed to the needs of the majority, and are thus anti-democratic.
Successes and Failures of Privatization in the United Kingdom
Most economists agree that consumers may be worse off if a natural monopoly is privatized without being subject to a strong and effective regulation and creating independent regulatory institutions, otherwise it will be prone to serious market failures when in private hands. This seems to have been the case with rail privatization in the UK and in telecommunications in Mexico;
Privatization has been notably successful in telecommunications in Europe because genuine competition has arisen: the former state-owned enterprises lost their monopolies due to legislation and technological change, competitors entered the market, and prices for broadband access and telephone calls fell dramatically.
British Rail is an example of privatization program that has been deemed a failure. The track-owning company has been effectively repossessed by the British government, and many of the train-running companies are at risk of having their concession removed on the grounds that they fail to provide adequate services. In this case Stephen Byers (then Secretary of State for Transport) decided to call in administrators with regard to Railtrack (the infrastructure company created in 1993 and privatised in 1996) and transferring the infrastructure to the new Private Company Limited by Guarantee, Network Rail (a not for profit private company with no shareholders), Train Operation remains in the hands of private operators with franchises awarded by the Department for Transport (except for Merseyrail the franchise of which is awarded by Merseyside Passenger Transport Executive).
Alternatives to privatization
Municipalization
Transfering control of a nationalized business to municipal governement is an alternative sometimes proposed to privitization.
Sub-contracting
It is possible that national services may sub-contract or out-source functions to private enterprises. A notable example of this is in the United Kingdom, where many municipalities have contracted out their rubbish collection or administration of parking fines by tender to private companies.
In addition, the British government is debating the possibility of involving the private sector more in the workings of the NHS, principally by referring patients to private surgeries to ease the load on existing NHS human resources, and covering the cost of this.
Part ownership
An enterprise may be privatized, with a number of shares in the company being retained by the state.
Whilst partial privatization could be an alternative, it is more often a stepping stone to full privatization. Some state-owned companies are so large that there is the risk of sucking liquidity from the rest of the market, even in the most liquid marketplaces, and thus must be sold off bit by bit. The first tranche of a multi-step privatization would also in the first instance establish a valuation for the enterprise to mitigate complaints of under-pricing.
Notable privatizations
See also: List of privatizations
Privatization programmes have been undertaken in many countries across the world, falling into three major groups. The first is privatization programmes conducted by transition economies in Central and Eastern Europe after 1989 in the process of instituting a market economy. The second is privatization programmes carried out in developing countries under the influence of international financial institutions such as the World Bank and IMF. The third is privatization programmes carried out by developed country governments, the most comprehensive probably being those of New Zealand and the United Kingdom in the 1980s and 1990s.
Negative Popular Responses to Privatization
Privatization proposals in key public service sectors such as water and electricity are in many cases strongly opposed by opposition political parties and civil society groups. Opposition is usually strongest to water privatization - as well as Cochabamba (2000), recent examples include Ghana and Uruguay (2004). In the latter case a civil-society-initiated referendum banning water privatization was passed in October 2004.
Unindexed
Bel, Germà (2006), "The coining of `privatization´and Germany's National Socialist Party", Journal of Economic Perspectives 20(3), 187-194 Clarke, Thomas (ed.) (1994) "International Privatisation: Strategies and Practices" Berlin and New York: Walter de Gruyter, ISBN 3-11-013569-8 Clarke, Thomas and Pitelis, Christos (eds.) (1995) "The Political Economy of Privatization" London and New York: Routledge, ISBN 0-415-12705-X Juliet D’Souza, William L.
Citing this material
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Highlight the text below, right-click, and select “copy”. Paste the link into your website, email, or any other HTML document.
<a href="http://encyclopedia.stateuniversity.com/pages/17871/privatization.html">privatization - Overview, Types of Privatization/Methods of Government Disinvestment</a>
The return to private ownership of organizations formerly owned by the state. The government issues shares in the company to be privatized, and offers them for sale to the public. The company therefore becomes answerable to the shareholders and not to the government. Several cases of privatization took place in Britain in the 1980s, including British Telecom and British Gas. The government was able to raise considerable sums of money by this means, thus helping to reduce its borrowing requirements and cut tax rates. The privatization of certain public-sector utilities such as the railway system has led to criticism of the companies' safety procedures in favour of cost-cutting.
Privatization (alternately "denationalization" or "disinvestment") is the transfer of property or responsibility from the public sector (government) to the private sector (business).
Overview
Although there is a large middle-ground between these polar positions, the pro and con ideologies pertaining to privatization are these:
The Pro-Privatization Argument Synopsis
Proponents of privatization believe that private market actors can more efficiently deliver any good or service than government can provide. Privatization proponents' faith in the market is philosophically based in an economic principle of competition: that where there is a profit to be made, competition will inevitably arise, and that competition will inevitably draw prices down while increasing efficiency and quality. By the same principle, privatization proponents feel that government lends itself to waste because it has no competition. A related argument for privatization says that it is preferable to maximize the number of social arenas open to entrepreneurship- charging government with robbing would-be entrepreneurs, and society at large, by meddling in the market.
The Anti-Privatization Argument Synopsis
Opponents of privatization believe certain parts of the social terrain should remain closed to market exploitation in order to protect them from the unpredictability and ruthlessness of the market (such as Private prisons).
The controlling ethical issue in the anti-privatization perspective is the need for responsible stewardship of social support missions. Privatization opponents believe that this model is not compatible with government missions for social support, whose primary aim is delivering affordability and quality of service to society. Opponents also would claim that many of the utilities which government provides benefit society at large and are indirect and difficult to measure. As a result, many functions which government provides, such as defense, have been historically identified as being unproductive and unable to produce a profit.
Many privatization opponents also warn against the practice's inherent tendency toward corruption. As many areas which the government could provide are essentially profitless, the only way private companies could, to any degree, operate them would be through contracts or block payments.
Some would also point out that privatizing certain functions of government might hamper coordination, and charge firms with specialized and limited capabilities to perform functions which they are not suited for. In rebuilding a war torn nation's infrastructure, for example, a private firm would, in order to provide security, either have to hire security, which would be both necessarily limited and complicate their functions, or coordinate with government, which, due to a lack of command structure shared between firm and government, might be dificult.
There are various precedents in history which some would claim as examples in which improper privatization, or the failure of government to conduct certain functions, caused various complications. In the 18th Century, military functions such as maintaining forts and garrisons along the African coast were, in effect, privatized to the East India Company, with parliament obliged to pay 13,000 pounds a year to support the East India Company in this end. In the reconstruction of Iraq, the government decided to contract out many different reconstruction functions to private firms. The uncoordinated action between private emergency relief agencies, as well as the military (which would often turn back relief trucks) resulting in the poor response to the storm that many would claim was a result of this privatization.
Types of Privatization/Methods of Government Disinvestment
There are three main methods of privatization:
Share Issue privatization (SIP) - selling shares on the stock market Asset Sale privatization - selling the entire firm or part of it to a strategic investor, usually by auction or using Treuhand model Voucher privatization - shares of ownership are distributed to all citizens, usually for free or at a very low price.Share issue privatization is the most common type. A political government may only be motivated to improve a function when its poor performance becomes politically sensitive, and such an improvement is easily reversed by another regime. Conversely, the government may put off improvements due to political sensitivity and special interests — even in cases of companies that are run well and better serve their customers' needs. A political government tends to run an industry or company for political goals rather than economic ones. Privately held companies can more easily raise investment capital in the financial markets, investment decisions are governed by market interest rates. Poorly managed state companies are insulated from the same discipline as private companies, which could go bankrupt, have their management removed, or be taken over by competitors. Private companies make a profit by enticing consumers to buy their products in preference to their competitors'.
The basic economic argument given for privatization is that governments have few incentives to ensure that the enterprises they own are well run. As Governments may borrow money more cheaply from the debt markets than private enterprises, they will squeeze out more efficient private companies through this misallocation of resources.
Where governments lack it, it is said that private owners do have profit motive. Ideally, privatization propels the establishment of social, organizational and legal infrastructures and institutions that are essential for an effective market economy.
Privatizing a non-profitable (or severe loss-making) company which was state-owned would shift the burden of financing off taxpayers, as well as freeing some national budget resources which may be subsequently used for something else.
The main political argument for privatization is that of civil liberties and privacy.
Anti-Privatization
Opponents of privatization dispute the claims concerning the alleged lack of incentive for governments to ensure that the enterprises they own are well run, on the basis of the idea that governments are proxy owners answerable to the people. It is argued that a government which runs nationalized enterprises poorly will lose public support and votes, while a government which runs those enterprises well will gain public support and votes. Thus, democratic governments do have an incentive to maximize efficiency in nationalized companies, due to the pressure of future elections.
Furthermore, opponents of privatization argue that it is undesirable to transfer state-owned assets into private hands for the following reasons:
Performance. the government is motivated to performance improvements as well run businesses contribute to the State's revenues. The public does not have any control or oversight of private companies. The government may seek use state companies as instruments to further social goals for the benefit of the nation as a whole. If a government-owned company providing an essential service (such as water supply) to all citizens is privatized, its new owner(s) could lead to the abandoning of the social obligation to those who are less able to pay, or to regions where this service is unprofitable. Privatization will not result in true competition if a natural monopoly exists. Governments may more easily exert pressure on state-owned firms to help implementing Government policy. Private companies often face a conflict between profitability and service levels, and could over-react to short-term events. Private companies do not have any goal other than to maximize profits. A private company will serve the needs of those who are most willing (and able) to pay, as opposed to the needs of the majority, and are thus anti-democratic.Successes and Failures of Privatization in the United Kingdom
Most economists agree that consumers may be worse off if a natural monopoly is privatized without being subject to a strong and effective regulation and creating independent regulatory institutions, otherwise it will be prone to serious market failures when in private hands. This seems to have been the case with rail privatization in the UK and in telecommunications in Mexico;
Privatization has been notably successful in telecommunications in Europe because genuine competition has arisen: the former state-owned enterprises lost their monopolies due to legislation and technological change, competitors entered the market, and prices for broadband access and telephone calls fell dramatically.
British Rail is an example of privatization program that has been deemed a failure. The track-owning company has been effectively repossessed by the British government, and many of the train-running companies are at risk of having their concession removed on the grounds that they fail to provide adequate services. In this case Stephen Byers (then Secretary of State for Transport) decided to call in administrators with regard to Railtrack (the infrastructure company created in 1993 and privatised in 1996) and transferring the infrastructure to the new Private Company Limited by Guarantee, Network Rail (a not for profit private company with no shareholders), Train Operation remains in the hands of private operators with franchises awarded by the Department for Transport (except for Merseyrail the franchise of which is awarded by Merseyside Passenger Transport Executive).
Alternatives to privatization
Municipalization
Transfering control of a nationalized business to municipal governement is an alternative sometimes proposed to privitization.
Sub-contracting
It is possible that national services may sub-contract or out-source functions to private enterprises. A notable example of this is in the United Kingdom, where many municipalities have contracted out their rubbish collection or administration of parking fines by tender to private companies.
In addition, the British government is debating the possibility of involving the private sector more in the workings of the NHS, principally by referring patients to private surgeries to ease the load on existing NHS human resources, and covering the cost of this.
Part ownership
An enterprise may be privatized, with a number of shares in the company being retained by the state.
Whilst partial privatization could be an alternative, it is more often a stepping stone to full privatization. Some state-owned companies are so large that there is the risk of sucking liquidity from the rest of the market, even in the most liquid marketplaces, and thus must be sold off bit by bit. The first tranche of a multi-step privatization would also in the first instance establish a valuation for the enterprise to mitigate complaints of under-pricing.
Notable privatizations
See also: List of privatizations
Privatization programmes have been undertaken in many countries across the world, falling into three major groups. The first is privatization programmes conducted by transition economies in Central and Eastern Europe after 1989 in the process of instituting a market economy. The second is privatization programmes carried out in developing countries under the influence of international financial institutions such as the World Bank and IMF. The third is privatization programmes carried out by developed country governments, the most comprehensive probably being those of New Zealand and the United Kingdom in the 1980s and 1990s.
Negative Popular Responses to Privatization
Privatization proposals in key public service sectors such as water and electricity are in many cases strongly opposed by opposition political parties and civil society groups. Opposition is usually strongest to water privatization - as well as Cochabamba (2000), recent examples include Ghana and Uruguay (2004). In the latter case a civil-society-initiated referendum banning water privatization was passed in October 2004.
Unindexed
Bel, Germà (2006), "The coining of `privatization´and Germany's National Socialist Party", Journal of Economic Perspectives 20(3), 187-194 Clarke, Thomas (ed.) (1994) "International Privatisation: Strategies and Practices" Berlin and New York: Walter de Gruyter, ISBN 3-11-013569-8 Clarke, Thomas and Pitelis, Christos (eds.) (1995) "The Political Economy of Privatization" London and New York: Routledge, ISBN 0-415-12705-X Juliet D’Souza, William L.Citing this material
Please include a link to this page if you have found this material useful for research or writing a related article. Content on this website is from high-quality, licensed material originally published in print form. You can always be sure you're reading unbiased, factual, and accurate information.
Highlight the text below, right-click, and select “copy”. Paste the link into your website, email, or any other HTML document.
<a href="http://encyclopedia.stateuniversity.com/pages/17871/privatization.html">privatization - Overview, Types of Privatization/Methods of Government Disinvestment</a>http://encyclopedia.stateuniversity.com/pages/17871/privatization.html
Economic Analysis of Everest Expeditions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Economic Analysis of Everest Expeditions by Parashar Kulkarni | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parashar Kulkarni for The 2004 Moffatt Prize in EconomicsSince the decade of the 90s, liberalisation has been the guiding star for India’s policy framework. International financial institutions, consulting firms and government committees have pushed liberalization in India by advocating policy measures such as privatisation[1], disinvestment[2], commercialisation, deregulation and international integration. A review through the vast literature on the reform process takes us through the journey of India’s movement from a socialist closed economy to a pro market open economy. A broad summary of the liberalization agenda includes - steady reduction in the number of strategic[3] sectors (Presently there are three strategic sectors: defence, atomic energy and railway transport) and selling equity stakes in public sector units; - liberalization of financial markets and domestic and international integration; - decontrol of price regimes; - Promotion of pro market reforms and move towards a market economy.
An important and ongoing component of the reform process consists of privatisation and disinvestment. With the growth in libertarian though the government is increasingly cautious of its burgeoning size and unnecessary involvement in commercial activities. The government is changing its role in markets; from that of a participant to that of a regulator and in this process trying to attain several objectives such as efficiency, revenue generation, competition, and economic development. In certain situations few objectives contradict each other and have to be balanced.
In this essay we shall focus on the relation between two such contradicting objectives
Revenue Generation and Efficient market structure
Disinvestment plays an important role in revenue generation. Good disinvestment receipts can help the government reduce fiscal deficit not only by way of equity sale in PSUs but also for the subsequent cap in government transfers to bleeding PSUs. But has the government been successful in this context. Trends in the past few years have displayed wide and abysmal differences in disinvestment targets and actual receipts.
Political hurdles in disinvestment, intervention of stakeholders and interest groups as well as poor state of PSUs have all contributed to this performance.
Efficient Market Structure is also one of the important goals in the disinvestment/privatisation process. The government would seek to establish a competitive market which would result in driving down consumer prices (telecom sector privatisation in India) or it would try to maximize revenue by divesting in a pseudo monopoly environment and using regulation to control rent seeking behaviour (Reliance acquisition of IPCL) but it cannot try to maximize both revenue and market structure. The following case will explain the contradiction in the two objectives.
Consider the example of the Domestic Airline industry in India, an oligopoly dominated by three players: Jet, Sahara and Indian Airlines. Consider a hypothetical case of privatisation of Indian Airlines, the government owned airline company. How should the government privatise Indian Airlines? Should the government encourage more players by offering investment incentives and subsequently divest in a competitive market or should the government sell Indian Airlines to a third new entrant say Tata Airlines or should it permit a current player to buy Indian Airlines and increase the possibility of monopoly creation. Table 1.1. depicts the given situation objectively.
Table 1.1
Figure 1.1 explains the inverse relation between objectives of competitive market structure and revenue maximization. Competitive structure is plotted on Y axis and Disinvestment receipts on X axis
As the number of players in the market increase the value of the government entity to be divested decreases. Though a number of other variables effect price of government holdings, our interest lies in the inverse relationship of these two variables.
A deeper analysis is due on this relationship. Elements such as profitability, average PE ratios prevalent in that industry, growth rates, percentage ownership divested, market shares and several other factors have to be factored. The table below provides a rough idea of the relationship.
Table 1.2
Government Policy
How should the government balance it strategy in the light of the inverse relationship between market structure and disinvestment earnings.
The government can look at the following two complementary strategies to arrive at the solution 1) Different privatisation strategies on the basis of the nature of goods i.e. commercial, social, public utilities etc. E.g. To privatise markets for essential goods, the government should attempt to maximize social gain over monetary returns. Distribution systems for essential commodities can be an essential good where social gain needs to be prioritised. To privatise industrial markets the cash cow approach should be followed (Refer Boston Consulting Group Matrix). Efforts should be made to open markets, but sale of government sector companies should be timed between completely competitive and completely monopolized markets.
2) Withholding the sale, until the required market structure is created with the help of entry incentives. The following represents a widely accepted approach plan to disinvestments where the required market structure is created before sale.
Demonopolising/Permitting private entry
Developing incentive structure for private entry
Developing regulatory structure for adequate monitoring
Disinvestment
Solutions are not simple, especially where stakeholders are many and come from all sections of the society; workers, employees, management, equity holders and consumers. Further this essay looks only at a single variable i.e. market structure and its relationship with disinvestment receipts. Several other variables play more important roles in the scheme of disinvestment. The government should study international best practices, customize them to the Indian landscape and arrive at the right direction of the liberalization process. [1] Privatisation is defined as the exit of the government as a producer in a given market. [2] Disinvestment is defined as the reduction in government equity in public sector enterprises.. [3] Strategic sectors are those industries that are reserved for public sector enterprises. [4] This ratio reflects the premium at which the shares are sold. E.g. If selling price of a share is 100 rupees and face value (The face value of a share is usually the worth of a share at the time it was issued when the company was first formed) is 10 rupees, the share value / face value is 10. Higher the ratio, more is the premium received. If you'd like to leave comments about this entry, use the contest feedback form. Make sure to indicate that you are commenting on Parashar Kulkarni's "Market Structure and Revenue Generation in the Disinvestment Process".
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'''Disinvestment Is A Process Of Revival''
Arun Jaitley, the Union Minister for Disinvestment, is quite used to handling tricky problems. After all, he has been a lawyer and a spokesperson for the Bharatiya Janata Party (BJP). But nothing can beat the assignment that he has in his hands now--the disinvestment of 236 Central PSUs. Add to that the thankless job of extricating the government from all the sundry businesses. In an exclusive interview with BT's Seetha, the normally-forthright Jaitley holds forth on the conceptual framework of disinvestment, but clams up on specifics.
Q. The government seems to be getting aggressive on public sector sell-offs...
A. I think sell-offs is a wrong phrase. Because the whole process is really intended to improving efficiency both in the concerned PSU, and also in the economy as a whole. Disinvestment is a process of revival. It's a positive process. Sell-off is not a positive phrase.
Q. It's still not clear what is driving the disinvestment programme. Is it the need to plug the deficit or a genuine belief that government should get out of certain businesses?
A. I don't think plugging the deficit is a reason. The disinvestment proceeds are used for retiring public debt and for the social sector. A non-profitable business creates a budgetary deficit in the first place because you have to plough money into it to get it running.
We privatise to withdraw national resources locked in business, and substitute them with private investment. We privatise to make the economy more efficient. State-run industries, which have functioned in a protected, regulated, and, at times, monopoly environment, find it difficult to respond to the needs of the market. We want our former state enterprises to attract new capital, and modern technologies. We privatise to eliminate bureaucratic attitudes and allow entrepreneurial talents to emerge. We privatise to enable sick companies to turn around and hence save jobs. We also want to distribute the holdings of state enterprises among the people.
Q. There's still a lot of confusion around the disinvestment process. Companies are identified for disinvestment, and then withdrawn.
A. I don't think there is any confusion. Deferment is also for commercial reasons, not political reasons. For instance, we may look at the market at a particular time and find that the market is a little low for a particular share. That may not be the best time to disinvest.
Q. Are all cases of deferment devoid of politics? What about cases like Rashtriya Ispat Nigam and Indian Oil Corporation (IOC)?
A. IOC was a case in point where one of the reasons for holding back the 10 per cent flotation was the market condition. And certainly disinvestment is also a political exercise. You need a larger consensus and therefore you need consultation both inter departmental, as well as between the Centre and the state governments. Sometimes alternative viewpoints may not be about disinvestment but about modalities and timings. Ultimately it is the Cabinet Committee on Disinvestment (CCD) or the Cabinet which is the best judge.
Q. But there are several cases which have been cleared by the Cabinet but nothing much is happening.
A. Once there is a shift in emphasis to strategic sales--the process gets a little long. But it's not fair to say nothing is happening. Global advisors have been appointed in some cases, in other cases they are being appointed, and in some cases the shareholders' agreement is being finalised.
Q. You have been talking about a road-map for disinvestment. What is happening on that front?
A. I have been talking about a road-map for each PSU. This really means that you first determine the eventual destination of the PSU. We ask ourselves the following questions: Is it a strategic area that we don't privatise? Even if it is not a strategic area, is it an area where governmental presence is required as a countervailing force to private sector monopoly? Is it an area where the government can safely withdraw as there are already a large number of private players? How much of it should you give to a strategic partner and how much to employees and the stockmarket? Is it an area where we hold on to shareholding for a reasonable time, watch the performance of a strategic partner before deciding the fate of the residual holding? Or is it an area where we must not go in for a strategic partner but disperse the shareholding, and see to it that there is a professional management in place.
Once you decide on the relative importance of a particular company in a sector and that's the road-map, then you decide the process. This is quite different from just picking up five to ten per cent shares one year, and floating it in the market. All that must be part of a pattern, which in turn, must be dictated by the requirements of that sector.
Q. Has the government worked out a plan for the different sectors? There's no clarity on that.
A. No. Consultations with regard to this are in progress. The March 1999 decision of the Cabinet is very clear that except three strategic areas--nuclear and atomic energy, armaments and railway transport--the government may, at a particular time, pull out of any other.
Q. Is the oil sector one of those areas where consultation is on?
A. Well, the CCD is yet to discuss that. The government is yet to take a final decision.
Q. Successive governments have faced criticism on the valuation of PSUs. How are you planning to address that?
A. Part of the criticism is because of a failure to understand the valuation methodology. Firstly, the values are dictated by the market, everything is sold by a transparent bidding process. In the earlier GDR issues, the prices were determined by a book-building method. Once the prices are determined by a bidding process, there is little scope for discretion. Secondly, there are well known methods of valuing shares, and there are established models worldwide. In order to make sure that the government reaches a value which is equal to or more than the share valuation, the government keeps those values secret after determining them. Thereafter if after the bidding process you reach a higher value then you sell. Otherwise you decide whether to hold it back or sell
Critics, without understanding these basic facts, start comparing values on the strength of valuation of immovable property. They don't realise that you are not selling property, you are selling shares of a running business. Moreover, when you look at property values the important component is the land value. Now, a large part of the land is meant only for industrial use. People always confuse it with commercial or residential use. A bidder will take various factors into consideration, like what are the liabilities, the extent of overstaffing, the Voluntary Retirement Scheme (VRS) benefit that is payable, the kind of investment required to be pumped in for modernising the plant and increasing the capacity, and then how long will it take before the company can start earning profits, and eventually what is the anticipated profitability per share.
http://www.india-today.com/btoday/netexcl/netex2106/jaitley.htm
DISINVESTMENT POLICY | ||||||||||||||||||||||||||||||||||
The policy of the Government on disinvestment has evolved over a period and it can be briefly stated in the form of following policy statements made in the chronological order : Interim Budget 1991-92 (Chandrashekhar Government) The policy, as enunciated by the Chandrashekhar Government, was to divest up to 20% of the Government equity in selected PSEs in favour of public sector institutional investors. The objective of the policy was stated to be to broad-base equity, improve management, enhance availability of resources for these PSEs and yield resources for the exchequer.
Industrial Policy Statement of 24th July,1991 The Industrial Policy Statement of 24th July 1991 stated that the government would divest part of its holdings in selected PSEs, but did not place any cap on the extent of disinvestment. Nor did it restrict disinvestment in favour of any particular class of investors. The objective for disinvestment was stated to be to provide further market discipline to the performance of public enterprises.
Budget speech: 1991-92 In this pronouncement, the cap of 20% for disinvestment was reinstated and the eligible investors' universe was again modified to consist of mutual funds and investment institutions in the public sector and the workers in these firms. The objectives too were modified, the modified objectives being: "to raise resources, encourage wider public participation and promote greater accountability".
Report of the Committee on the Disinvestment of Shares in PSEs (Rangarajan Committee): April 1993 The Rangarajan Committee recommendations emphasised the need for substantial disinvestment. It stated that the percentage of equity to be divested could be up to 49% for industries explicitly reserved for the public sector. It recommended that in exceptional cases, such as the enterprises which had a dominant market share or where separate identity had to be maintained for strategic reasons, the target public ownership level could be kept at 26%, that is, disinvestment could take place to the extent of 74%. In all other cases, it recommended 100% divestment of Government stake. Holding of 51% or more equity by the Government was recommended only for 6 Schedule industries, namely:
The Common Minimum Programme of the United Front Government: 1996 The highlights of the policy formulated by the United Front Government were, as follows: To carefully examine the public sector non-core strategic areas; To set up a Disinvestment Commission for advising on the disinvestment related matters; To take and implement decisions to disinvest in a transparent manner; Job security, opportunities for retraining and redeployment to be assured. No disinvestment objective was, however, mentioned in the policy statement.
Disinvestment Commission Recommendations: Feb.1997- Oct. 1999 Pursuant to the above policy of the United Front Government, a Disinvestment Commission was formed in 1996. It made recommendations on 58 PSEs. The recommendations indicated a shift from public offerings to strategic / trade sales, with transfer of management, as the following table shows :
( II ) The Second Phase In its first budgetary pronouncement, the new Government decided to bring down Government shareholding in the PSUs to 26% in the generality of cases, (thus facilitating ownership changes, as was recommended by the Disinvestment Commission). It however, stated that the Government would retain majority holdings in PSEs involving strategic considerations and that the interests of the workers would be protected in all cases.
Budget Speech: 1999-2000 The policy for 1999 - 2000, as enunciated by the Government, was to strengthen strategic PSUs, privatise non-strategic PSUs through gradual disinvestment or strategic sale and devise viable rehabilitation strategies for weak units. A highlight of the policy was that the expression 'privatisation' was used for the first time.
Strategic & Non-strategic Classification On 16th March 1999, the Government classified the Public Sector Enterprises into strategic and non-strategic areas for the purpose of disinvestment. It was decided that the Strategic Public Sector Enterprises would be those in the areas of : Arms and ammunitions and the allied items of defence equipment, defence air-crafts and warships; Atomic energy (except in the areas related to the generation of nuclear power and applications of radiation and radio-isotopes to agriculture medicine and non-strategic industries); Railway transport. All other Public Sector Enterprises were to be considered non-strategic. For the non-strategic Public Sector Enterprises, it was decided that the reduction of Government stake to 26% would not be automatic and the manner and pace of doing so would be worked out on a case-to-case basis. A decision in regard to the percentage of disinvestment i.e., Government stake going down to less than 51% or to 26%, would be taken on the following considerations: Whether the industrial sector requires the presence of the public sector as a countervailing force to prevent concentration of power in private hands, and Whether the industrial sector requires a proper regulatory mechanism to protect the consumer interests before Public Sector Enterprises are privatised. Budget speech: 2000 - 2001 The highlights of the policy for the year 2000 - 01 were that for the first time the Government made the statement that it was prepared to reduce its stake in the non-strategic PSEs even below 26% if necessary, that there would be increasing emphasis on strategic sales and that the entire proceeds from disinvestment / privatisation would be deployed in social sector, restructuring of PSEs and retirement of public debt. The main elements of the policy were reiterated as follows: To restructure and revive potentially viable PSEs; To close down PSEs which cannot be revived; To bring down Government equity in all non-strategic PSEs to 26% or lower, if necessary; To fully protect the interests of workers; To put in place mechanisms to raise resources from the market against the security of PSEs' assets for providing an adequate safety-net to workers and employees; To establish a systematic policy approach to disinvestment and privatisation and to give a fresh impetus to this programme, by setting up a new Department of Disinvestment; To emphasize increasingly on strategic sales of identified PSEs; To use the entire receipt from disinvestment and privatisation for meeting expenditure in social sectors, restructuring of PSEs and retiring public debt.
Address by the President to Parliament in the Budget Session (February, 2001) "The public sector has played a vital role in the development of our economy. However, the nature of this role cannot remain frozen to what it was conceived fifty years ago - a time when the technological landscape, and the national and international economic environment were so very different. The private sector in India has come of age, contributing substantially to our nation-building process. Therefore, both the public sector and private sector need to be viewed as mutually complementary parts of the national sector. The private sector must assume greater public responsibilities just as the public sector needs to focus more on achieving results in a highly competitive market. While some public enterprises are making profits, quite a few have accumulated huge losses. With public finances under intense pressure, Governments are just not able to sustain them much longer. Accordingly, the Centre as well as several State Governments are compelled to embark on a programme of disinvestment. The Governments' approach to PSUs has a three-fold objective: revival of potentially viable enterprises; closing down of those PSUs that cannot be revived; and bringing down Government equity in non-strategic PSUs to 26 percent or lower. Interests of workers will be fully protected through attractive VRS and other measures. This programme has already achieved some initial successes. The Government has decided to disinvest a substantial part of its equity in enterprises such as Indian Airlines, Air India, ITDC, IPCL, VSNL, CMC, BALCO, Hindustan Zinc, and Maruti Udyog. Where necessary, strategic partners would be selected through a transparent process".
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Mainstream, Vol XLVII, No 2, January 24, 2009
Getting to the Roots of Global Terror
by Gilbert Sebastian, 26 January 2009
The Mumbai terror strikes on November 26, 2008 and a number of other terror attacks in the Indian cities have shocked our conscience and our sensibilities. The strikes on locations of the rich and powerful like the Taj and Trident hotels in the metropolis have woken up the Indian security establishment, something which did not happen when bombs exploded in busy marketplaces and railway stations. The visual media revealed its class bias by paying little attention to the first terror strike in Mumbai this time leaving 30 persons dead on the spot at the Chhatrapati Shivaji Terminus (CST) railway station.
Rather than analysing the root causes of terrorism, the visual media in particular has been indulging in anti-Pak jingoism and politician-bashing for security lapses. The police and armed forces have been painted in larger-than-life images. The stereotyping and stigmatising of the Muslims has also proceeded apace. The paranoia about security and intolerant attitudes have reached unprecedented heights. One would well wonder if we are going to have a paranoid society in the near future.
There are many politicians as well as middle class persons who believe that the fight against terrorism has to be in the US/Israeli way. The fact of the matter remains that the US and Israel have not been able to solve their own security problems even after several decades of following a security-centric approach. The floor managers in the UPA Government were quick to capitalise on the Mumbai attack by promptly passing the Unlawful Activities (Prevention) Amendment Bill, 2008, which clearly signalled a going back on the promise that civil liberties would not be curtailed in the fight against terror.
Of our Comrade Country in the Anti-colonial Struggle
WAR-MONGERS on the Indian side such as the Shiv Sena supremo, Bal Thackeray, propose to deal a crushing defeat to Pakistan for supporting terrorist outfits through the Inter-Services Intelligence (ISI). The civilian government in Pakistan, however, is still struggling with the military to wrest control over the ISI. Listen to Arun Shourie, our erstwhile Disinvestment Minister, who personifies the confluence of neo-liberalism and Hindutva:
… no war is won with minimal force. It is won by overwhelming the enemy. Not an eye-for-an-eye, not a tooth-for-a-tooth. For an eye, both eyes! For a tooth, the whole jaw!
Given the fact that both the countries are nuclear powers, the dangers underlying such war cries should be obvious. In fact, with the nuclearisation of South Asia, initiated by India in the first place, New Delhi has lost out its conventional military superiority over Islamabad. The presence of terrorist outfits that would fight against India is an added factor in future wars with Pakistan. It is said that even a full-fledged conventional war could take the country back by 50 years. Remember the conditions prevalent in India in 1958! Unfortunately, our historical memories do not extend beyond our violent communal partition. Should we not also recall that the peoples of India and Pakistan have fought shoulder to shoulder against colonialism and that Muhammed Iqbal, the national poet of Pakistan, had composed our patriotic song, ‘Saare jahaan se achha, Hindusitan hamaara …’?
Shall we Agree on what is Terrorism?
THERE was no consensus in the UN on the definition of terrorism nor on which organisations are terrorist, possibly because certain states wanted to de-legitimise militancy based on genuine political assertions of rights. But it would not be inappropriate to designate the indiscriminate act of killing of innocent civilians as terrorism. The purpose, of course, is to wreak revenge and to draw attention to the demands of some aggrieved section. Terrorist acts are fallouts of a deep sense of alienation of a section or sections of people. That the terrorists are treading a completely misguided path should be amply clear: a bomb in the marketplace can kill both the saint and the sinner.
Sources of Communal Ideology
WE need to begin from the premise that common people from all religious backgrounds are peace-loving. The communal ideologies owe their origins to the dominant classes whether from the colonial policy of divide and rule or from communal politicians of different shades. Remember the call for ‘Direct Action’ and the ‘Hindi-Hindu-Hindustan …’ slogan of the partition days. Who did these come from?
Terror from the Other End
THE Malegaon episode showed that there is nothing community-specific about terrorism as such. It refuted the dictum: ‘All Muslims are not terrorists but all terrorists are Muslims.’ No one really knows who is responsible for the recent bombings of many of the civilian targets in India because hardly anyone has been indicted so far. The bomb blasts at Muslim-majority locations at Malegoan and several other towns in Maharashtra and in Ahmedabad, the unexploded bombs at Surat, the Mecca Masjid blast in Hyderabad, the blast in Samjhauta Express, plausibly the powerful bomb blasts in Guwahati etc. could have been the handiwork of Hindutva terrorists. There are people alleging a Hindutva-Zionist nexus in carrying out such attacks. There have also been allegations of the cynical operations of shady state agencies like the Research and Analysis Wing (RAW—the Indian counterpart of the notorious ISI of Pakistan) in inciting the Kuki-Naga conflict, carrying out bomb blasts in Pakistan etc. If the case of Sarabjit Singh was one of mistaken identity, who then carried out these sinister operations? The alleged fake encounter at Jamia Nagar in Delhi recently, the fake encounters allegedly carried out by the Gujarat security establishment under Narendra Modi showed that there are also conspiracies hatched by the state and the dominant social forces to get the desired political impact. There have also been international parallels to this phenomenon: it is now widely believed that the burning of the German parliament, Reichstag, was carried out by the Nazis. The Pearl Harbour bombing in 1941 and plausibly the 9/11/2001 attack on the World Trade Centre in the US were allowed to happen in spite of clear knowledge by the state.
Three Hated Targets of International Terror
HOW did it all begin? When did the phenomenon of international terrorism start? Although there were Al-Qaeda bombings before, 9/11/2001 is put as the watershed by many analysts.
The US, Israel and India are the prime targets of the Islamist terrorists. What could have been the plausible reasons? Antagonism to the US and its allies could have been owing to the long suffering of the Palestinians, the US dominance over the oil-rich region of West Asia and more recently the US attacks on the Muslim-majority countries of Afghanistan and Iraq. Antagonism to Israel could be for inflicting untold sufferings on their Arab Muslim brethren in Palestine and for acting as the prop of the US in Muslim-dominated West Asia. And antagonism to India could be for the sufferings in Kashmir, ‘the paradise on earth now stinking of charred human flesh’, and, of course, for our violent track-record against the Muslim minority. India’s strategic alliance with the US and Israel, especially as a junior partner of the US in South Asia, is definitely a cause of disaffection. George Bush’s ‘doctrine of zero tolerance for terrorism’ had already lent a new idiom of politics to the dominant classes in India. Although Russia and China have also been under fire over the suppression of the self-determination movements of Muslim-majority nationalities in Chechnya and Xinjiang, respectively, it is the US and its allies, Israel and India, that are the most hated powers in the Muslim world. A collision course with a vast and sprawling Islamic world does not bode well for the future of India even from a strategic point of view. It may be borne in mind that at the world level the Hindu community, a heterogeneous category as they are, constitutes a minority vis-à-vis Muslim or Christian communities.
Allah as Justice
THE cultural dimensions of the conflict and the contours of the process of identity formation are important but not without their bases in the political economy. Consider the exhortation in the Hadith: “Slay the infidel, when he attacks you and will not let you practise your religion.” This may explain to some extent why Muslims protested so vehemently against the demolition of the Babri Masjid. Narai taqdeer, Allahu Akbar (Do not be afraid, Allah is great) is a powerfully motivating slogan most often used in the mass protests in Kashmir. If God in Christianity is love, Allah in Islam is justice. It cannot be overlooked that Prophet Muhammed himself was a militant for the cause of justice. No wonder Islam, even today, motivates people to rebel against injustices. No doubt, the reactions of the Islamist terrorist groups like the Al-Qaeda and Lashkar are highly disoriented and abominable but the context of these reactions cannot be missed out. As the world renowned Islamic Madrasas Association at Deoband in Uttar Pradesh ruled on February 25, 2008, the terrorist reaction is un-Islamic to the core and there are explicit injunctions in the Koran against killing innocent civilians.
Did they also ask for Something?
IN a talk on terrorism, the retired Professor from Delhi University, J.P.S. Uberoi, was insistent that one must look into the demands of the terrorist/militant organisations. Well before the 9/11/2001 attack, the demands of the Al-Qaeda were already broadcast on the BBC in 1998; so was the Peshawar conference of the Al-Qaeda covered in the news. The following demands of the Al-Qaeda are worth recalling: (1) holy places of Muslims should not have military presence; (2) there should be no sanctions against Iraq; (3) the United States’ support for non-democratic Muslim governments should stop. The United States maintained that these demands were ‘motivated’ and President George W. Bush pledged not to have any negotiations with the terrorists. He asserted that they had to be ‘hunted down and brought to justice’. Even the Khalistani militants in Punjab had their demands which included that agricultural prices should not be fixed so low.
Dealing with ‘the Other’ Within
M.S. GOLWALKAR, the ‘Guruji’ (master) of Rashtriya Swayamsevak Sangh (RSS), in his book, We or Our Nationhood Defined, had written about the approach the ‘Hindu Rashtra’ should adopt towards its religious minorities: There are only two courses open to the foreign elements, either to merge themselves in the national race and adopt its culture, or to live at its mercy so long as the national race may allow them to do so and to quit the country at the sweet will of the national race.
Again, he says the minorities
must cease to be foreigners or may stay in the country wholly subordinated to the Hindu nation claiming nothing, deserving no privileges, far less any preferential treatment, not even citizens’ rights.
“There is,” he says, “at least should be, no other course for them to adopt.”
Even if Golwalkar’s proposal is accepted, it is well-nigh impossible to crush a huge minority of 12.4 per cent Muslims in India as of 2001. In Hitler’s Germany, Jews were only around one per cent; so it was much easier to subjugate them. Even the Christian minority in India today is 2.3 per cent as per the 2001 Census. Attempts to forcibly subjugate these communities can only lead to the tearing apart of the social fabric which would be detrimental to the interests of even the dominant social forces because in such a situation, a regime of unhindered accumulation cannot be sustained.
What Mothers have given Birth to the Terrorists?
DURING the Afghan war against Soviet occupation, it was the CIA that funded and supported Osama bin Laden and the Taliban. Even today, the ultra-conservative Saudi monarchy of the Wahabi ilk is actively backed by US imperialism because of its oil and geo-political interests in West Asia. Probably, the present Islamist Saudi regime qualifies as the case of Third World fascism but is hardly pulled up by the US and its allies for lack of democracy or violation of human rights. It has been pointed out that the Saudi regime’s funding to Wahabi missionaries finds way into the hands of the terrorists who fight in the name of jehad (holy war). It has been shown time and again in history that chauvinistic ideas, including communal ideas, gripping people’s minds can become a potent material force that can eventually threaten even the dominant class interests that had initially propped them up for their own narrow and selfish material interests. These are also reminiscent of the Bhasmaasur-Shiva episode in Hindu mythology. It is known that Bhindranwale, the Khalistani terrorist, was propped up by Indira Gandhi and eventually she herself fell victim to the Khalistanis. The Pakistani political elite, who had at times extended overt or covert support to the terrorist outfits, are themselves now at the receiving end of these ‘non-state actors’. Similarly, the US has not been able to control the militancy that it promoted against the Soviets with the militants now turning against them. Here the cultural processes of identity formation assume autonomy from their material bases.
Getting to the Roots
IT is apparent that neo-liberal globalisation has been accompanied by the rise of fascistic communalism in our country. Communal divisions preclude the possibility of a united fight by the majority and minority communities against neo-liberal globalisation akin to the anti-colonial revolt of 1857 which was fought unitedly by the Hindus and Muslims. On this count, the Ram Janmabhoomi movement since the mid-1980s had prepared the ground for the aggressive self-expansion of oligopolist capital. The political sustainability of neo-liberal reforms was ensured by the rise of Hindutva communalism and the minority communalism that arose was mostly a reaction to it.
The dominant discourse in India on tackling terrorism has been a security-centric one in which one hardly finds a way out from the unending and vicious kaarmik cycle of action and reaction. The paranoia about security gives rise to a spiral of violence. It is a violence that begets violence—it is not the violence exercised in a Ceasarian section to give birth to a baby. It has no long-term vision or sense of direction and is based on a communally jaundiced view of meeting pragmatic targets. Whether the dominant classes are obsessed with short-term gains in pursuing such ad-hocism in policy and/or sections of them are deluded by their own ideology is a matter to be investigated. Security, however, can be understood in a broader sense as ‘human security’ as related to the insecurities arising out of the impact and repercussions of neo-liberal globalisation and especially the military globalisation of today.
The roots of the deep sense of alienation and victim mindset among Muslims in India go back to the many communal riots that have shamed our country in the past and the impunity enjoyed by the perpetrators. However, speaking of the root cause of terrorism in India, the demolition of the Babri Masjid in late 1992 and the riots that followed, the gross atrocities by the Indian security forces in Kashmir since 1990 and the Gujarat carnage of early 2002 (whose perpetrators are still at large), have been landmarks in the history of Islamist terrorism in India as were ‘Operation Bluestar’ and the anti-Sikh riots (both in 1984) in the history of the Khalistani movement. Dr Riaz Ahmed of the Delhi University rightly says that terrorism is the ‘desperate reaction of a desperate people’. Terrorists are crying for attention towards issues like the gross violations of collective human rights in Kashmir and justice to the victims of the carnage in Gujarat.
Kashmir has had an ardently secular Sufi past, it opposed the communal two-nation theory during the Indo-Pak partition in 1947 and the demand of the Jammu and Kashmir Liberation Front (JKLF) was for a secular, democratic republic of Jammu, Kashmir, Ladakh and the Pak-ruled Gilgit. It is after the suppression of the JKLF that the Hizbul Mujahideen, a moderately communal militant group, arose. The origin of the communal, terrorist and pro-Pakistani outfits of Kashmir today, namely, Lashkar-e-Taiba, Harkat-ul-Mujahideen and Jaish-e-Muhammed owes a lot to the brutal suppression by the Indian state of the self-determination movement in Kashmir, costing around 80,000 Kashmiri lives as also to the sinister support extended to these outfits by the ISI from the Pakistani side. The travails of the near and dear ones of around 10,000 persons who have gone missing constitute the most poignant part of the Kashmir story. The fact that public debates in the rest of India on the gross atrocities by the Indian security forces in Kashmir have been few and far between casts a reflection on the democratic credentials of our public sphere. In the mainstream anti-terrorist rhetoric, the phenomenon of state terror is conveniently overlooked. The existence of the draconian Armed Forces (Special Powers) Act, 1958 in Kashmir and the North-East of India clearly indicates that the peoples of these regions are treated by the Indian state as ‘incomplete citizens’.
So far, suggestions to address the root cause of terrorism have often come not from the mainstream Indian media but from external sources such as the governments of China or Pakistan. The anti-Pak jingoism in the visual media today is reminiscent of the malevolent role of the Bombay media in pushing us to the brink of a disastrous border war with China in 1962.
The crushing of terrorism in Punjab by sheer military means—as testified by the records of cremation of 2097 bodies, many of them at Tarn Taran in the early 1990s—was possible because the militant movement had lost its mass base owing to the much-hated tactics such as bombing civilian targets. People who are optimistic that since there is no trace of terrorism in Punjab today, a militaristic approach to the issue can be adopted even in the Kashmir case, may be grossly wrong. The Punjab militancy lasted for less than a decade since 1984 but the Kashmir militancy has lasted nearly two decades now since 1988 and the cause still enjoys popular support in the Valley despite all the Machiavellian tactics hatched by our strategic analysts. Sikhs have been a micro-minority at the global level which is far from the case with the Muslims. The communalisation of the cause of Kashmiriyat only signalled its merger into the potent pan-Islamic identity and by no means a weakening of this cause.
It is high time we stress on a political solution instead of a military solution. We are in a state of permanent ad-hocism. A durable, lasting solution is still out of sight. Are the results of the recent Assembly elections in four States an indicator that the ill-fed, ill-clad, illiterate masses of India—over three-fourths of whom subsist on less than 20 rupees a day, according to the Arjun Sengupta Committee report—are becoming politically mature enough to reject a cynically communal and a narrowly security-centric anti-terrorist agenda that does not address their basic needs? Yes, the fundamental choice is still with the Indian state and the dominant social forces whether to root out terror by addressing its deep-seated causes or keep chipping away at its branches for all times to come.
[The author thanks Dr Prashant Trivedi and Dr Riaz Ahmed for their comments. The views expressed above are only personal.]
Dr Gilbert Sebastian works as an Associate Fellow at the Council for Social Development, New Delhi. He can be contacted at gilbert_sebs@yahoo.co.in
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Laloo prasad yadav presenting rail budget. ... Lalu Prasad Yadav Nuclear Vote Speech · Added. 7:23. Lalu Prasad Yadav Nuclear Vote Speech ...
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6th Railway Budget Presented By Lalu Prasad Yadav -Asia News - 4 hours ago Lalu Prasad Yadav arrived in Parliament to present Railway Budget -AIndiaNews.com - 10 hours ago Laloo prasad yadav in comedy mood -Near Mint Heroes Comedy - 3 hours ago
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