The total priivatisation on October 8 of Air India, the public sector national airline, which during the past 68 years since it was nationalised in 1953 has recorded a cumulative loss of Rs.70,000 crore, is a milestone in the half-hearted national development history of post-independent India. That this perpetually bleeding airline has been re-purchased by the business house of Tata from whom it was unwarrantedly snatched away almost seven decades ago, is a double bonus. The privatisation of Air India is a landmark inasmuch as it has prepared the ground for the privatisation of a large number of the country’s 358 Central and state government public sector enterprises (PSEs), including nationalised banks established at huge cost to the public exchequer, but have bled the economy dry and destroyed the modest material aspirations of hundreds of millions of free India’s citizens.
Regrettably, the country’s academics and public intellectuals continue to be in love with the inorganic PSE-led economic development model imposed upon newly-independent India by a myopic political leadership. The plain truth is that the recurring losses incurred by PSEs which required budgetary support year after year, have been at the cost of public goods such as roads, railways, telephone connectivity, bank credit, quality government schools, primary health centres, police and judicial systems. All these public services — prerequisites of middle class societies — are grossly inadequate 74 years after independence.
Almost four decades ago, your editor wrote a first-ever 13-page feature in Business India that examined the commercial operations of Air India. At that time, the story reported that the nationalised airline was an unviable enterprise. It had double the number of employees per aircraft of any airline worldwide; the nationalised airline hosted over a dozen trade unions; it was run by a bureaucracy instead of professional management and all important decisions had to be cleared by New Delhi. Moreover, almost every employee was recruited on the recommendation of a member of the neta-babu brotherhood because in those years, an Air India job was highly coveted. The huge losses suffered by this nationalised airline — which in effect was captured by its over-paid, well-connected middle class employees — had to be borne by the masses toiling at the bottom of the country’s iniquitous socio-economic pyramid. This infirmity is common to all PSEs.
It’s high time the academy and teachers community acknowledge that until the mid-19th century, the Indian subcontinent was the world’s wealthiest and most prosperous region contributing 20 percent of global GDP. We were prosperous because governments focused on governance and maintaining law, order and justice systems. The proper organic development model is for government to enable industry and business entrepreneurs to prosper and pay taxes, for government to provide high quality public goods and services.
This should be taught to students in the nation’s classrooms. If not, it will take another 40 years for the next bleeding PSE to be privatised.
Also read: Don’t backslide on PSB privatisation