June 15, 2005

Ringing False

The Telegraph, 15.06.2005

Misinterpretation of facts to misguide the public is a common trait in Ashok Mitra’s articles. “Cellphones in lieu of rice” (June 10) is no exception. The common minimum programme states that public sector companies and nationalized banks will be encouraged to enter the capital market to raise resources and offer new investment avenues to retail investors. Therefore, divesting 10 per cent stake in Bharat Heavy Electrical Limited is entirely in line with the CMP, lest the author forgets that disinvestment is not synonymous with privatization. While lashing out at the Bretton Woods institutions, he fails to understand the basic workings of the market. Who would buy loss-making PSUs and why? If the government wants to raise money to upgrade the shoddy infrastructure or invest in public services, divestment has to be a key fund-raising mechanism.

The rural employment guarantee scheme has been rightly sidelined by the finance ministry. Not only would it be a gigantic waste of public resources, but in reality much of the money would end up in the pockets of corrupt bureaucrats. It is an economic fallacy to assume that just because 70 per cent of Indians are employed in agriculture today, the same situation would prevail in the future. We need to shift workers from the farm sector to industries and services so that we can increase productivity in agriculture. If, as Mitra claims, money saved from the employment guarantee scheme is being used to set up mobile phone-manufacturing plants, doesn’t that mean that more erstwhile unemployed Indians are getting a job?

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