Indian Economic Reforms? Can they be hold hostage by allies?

In the past few days Central Government has been forced to withdraw disinvestments in Naveli Lignite Corp by belligerent allies. Media has branded that the reforms have come to a standstill given the developements. Such comments by the media sometimes make me wonder whether disinvestments in super profitable PSU's only means reforms. Such views only give a lopsided and false view of structural adjustments needed for the Indian economy.

SO what can the government do in face of stiff opposition from the allies? Can the reforms be made in current situation where government has the constraint of allies and left.

Well...It is all about creating options... being sincere to the purpose

I think using disinvestment as a tool to bridge fiscal defecit is not going to solve any purpose. Britain sold it's most profitable PSU's in 80's under Iron Lady Margaret Thacher now find that they now control none of them. I don't know how much did this selloff help to bridge fiscal defecit, but selling these companies at bargain price is not a good idea.

The fiscal hole is too big to be bridged by selloff of profitable stocks. This will neither help solve the fundamental probs faced by PSU's.

I think government has to look at the option of strengthening the PSU's by:


allowing to raise money from the market rather then selling own share

This will raise money for PSU's which they can use for their expansion plans and investments etc. In fact even common minimum prog of UPA supports this.

Giving operational autonomy to PSU's

This is an old and off repeated issue. But franky speaking without giving autonomy to PSU's and asking them to face the competion is like hitting a person with his hands tied in the back.
I sicerely believe that PSU's have never been allowed to run as business ventures. What PSU's require are good management and consequently good resources . The very first step is then bringing all PSU's under one ministry I call PSU ministry.This ministry can also act as an agency to make the PSU's to follow best practices that it can itself set. I hope this will also free PSU's from 750 odd laws and regulations that they have to follow currently.
The second step would be to lift the ristriction on salaries though I think this can be achieved by the proposed ministry.

Looking at these options I do not think any ally will oppose these reforms as they are inherently do not cause any opposition.

My Image

Failed State Called Maharashtra

This title itself would make many wonder how the so called most developed state in India a failed state!! Maharastra y no means is Bihar or UP. I must be jonking Right.Well I'm not.

Consider these Facts:

Vidarbha has only 4% agricultural land under cultivation as compared to about 80% in western Maharashtra.Per capita income is 30% of that of western maharashtra.About 600 farmers have committed suicide in the region in last one year alone due to failed crops and still counting.. The region has to cope up with Naxal problem in Gadchiroli,Chandrapur and Bhandara.

Now go straight to Mumbai.

There has not been a single big Infrastructre project for Mumbai in last century! except for metro rail this year.Travel by local rain here is simply inhuman. Country's commercial capital has a marginal growth rate when country is experiencing double digit growth. 65% of city's population is living in slums .More people are shifting to slums as it becomes more and more difficult to live in a flat due to cost of living. All this because there has been no focus on Mumbai . It has been milched for money for so long and since people here are professional they are not bothered about all this.


What ails Maharatra?

Well the state is simply unmanageable if you do not have priorities.The challenges that Mumbai faces are not the same as what Western Maharastra faces, Vidarbha has very different developemental needs as compared to other parts of the state so does Marathwada.
The govt is only interested in developement of Sangli,Satara, Pune ...In fact the only region that has benefitted because of creation of Maharashtra is Western Maharastra thanks to so called 'Sugar King Politics'.

What can be done?

If I think from most efficient administration point of view :

Seperate states Vidarbha, Mumbai Metroplitan Region , Marathwada and Western Maharasthra and Konkan - based on administration challenges.