Promoting Privatization Jomo Kwame Sundaram

Privatization has been central to the ‘neo-liberal’ counter-revolution from the 1970s against government economic interventions associated with Roosevelt and Keynes as well as post-colonial state-led economic development. Many developing countries were forced to accept privatization policies as a condition for credit or loan support from the World Bank and other international financial institutions, especially after the fiscal and debt crises of the early 1980s. Other countries voluntarily embraced privatization, often on the pretext of fiscal and debt constraints, in their efforts to mimic new Anglo-American criteria of economic progress. Demonizing SOEs Globally, inflation was attributed to excessive government intervention, public…

The Strange form of “Disinvestment” C. P. Chandrasekhar

As the term of the current NDA government nears its end, with signs of popular dissatisfaction over its performance on the economic front, the urge to ramp up expenditure to woo the electorate intensifies. But a number of factors have combined to render that task difficult, with the failure of the government’s misplaced disinvestment programme being among the most important. Disinvestment receipts are crucial to the government this year for two reasons. First, while direct tax collections in 2018-9 are according to official figures on track to reaching targets, indirect tax collections have fallen short after implementation and periodic revision…

Professor C. P. Chandrasekhar on amalgamation of three banks C. P. Chandrasekhar

In an attempt to resolve the Non Performing Assets crisis in the country, the government's projected solution in the form of bank mergers, like the recent Vijaya Bank, Dena Bank and Bank of Baroda merger, points out that the end game of this process is privatization. (This video was originally published in the News Click on September 19, 2018)

The larger crisis that NPAs signal C. P. Chandrasekhar

Having overcome a legacy of extreme shortage of supply, India’s power sector is in the midst of a crisis with ramifications of a wholly different kind. The crisis arises because firms accounting for significant proportion of power sector assets have defaulted on their debt servicing commitments, and banks are not able to find ways of restructuring that debt or recouping their money. So the RBI’s guidelines requires that the assets should be liquidated to recover whatever is possible and compensate banks from which these firms had taken loans and then defaulted. But the assessment is that liquidation would yield the…

Revisiting Privatization’s claims Jomo Kwame Sundaram

Several arguments have been advanced to justify privatization since the 1980s. Privatization has been advocated as an easy means to: Reduce the government's financial and administrative burden, particularly by undertaking and maintaining services and infrastructure; Promote competition, improve efficiency and increase productivity in providing public services; Stimulate private entrepreneurship and investment to accelerate economic growth; Help reduce the public sector's presence and size, with its monopolistic tendencies and bureaucratic support. Moot case for privatization First, privatization is supposed to reduce the government's financial and administrative burdens, particularly in providing services and infrastructure. Earlier public sector expansion was increasingly seen as…

Window Dressing Budgetary Figures C.P. Chandrasekhar

The tendency of the current government to misinform and conceal is well known. Yet its periodic resort to such practices does not fail to surprise. The most recent example is the decision to sell its shareholding in Hindustan Petroleum Corporation Limited (HPCL) to the Oil and Natural Gas Commission (ONGC), which it owns, ostensibly to strengthen the latter. The decision comes at a time when low oil prices have hurt the ONGC. Yet, the ONGC board has cleared the proposal to buy 778,845,375 equity shares in HPCL for cash at a price of Rs. 473.97 per share. This acquisition of…

Financing Education Prabhat Patnaik

The Draft National Education Policy unveiled by the central government puts forward a bizarre line of reasoning. Education, it is argued on the basis of a long-held and honourable belief going back to the Kothari Commission, should have an annual expenditure of around 6 percent of the Gross Domestic Product; we have come nowhere near this figure even after so many years and cannot do so on the basis of government effort owing to our stretched budgetary resources; hence, to realize this target, which most right-thinking persons in the country would accept, we must draw the private sector into the…

Corruption in the age of Liberalisation C.P. Chandrasekhar

In a season for scandals, allegations of large scale corruption have captured political India’s attention. The instances to which such allegations relate are many, varying from the sale of 2G spectrum and the mobilisation and/or disposal of land and mining resources, to purchases made as part of large and concentrated public expenditures (as in the case of the Commonwealth Games). Features that these ostensible instances of corruption have in common are their large size in terms of sheer magnitude and the brazen violation of the law they involve. If true, the allegations not only indicate that corruption still prevails but…

How Brazil can defend against Financialization Michael Hudson

In this article, it is argued that for developing countries, privatizing the public domain and financializing the economy is akin to military defeat. To defend themselves, the BRIC countries need to isolate themselves from global debt creation. And Brazil (as well as other developing countries), needs to promote the investment of its economic surplus for raising production and living standards, so as to create a positive feedback between higher wage levels and productivity, hence higher global competitiveness. Brazil (Download the full text in PDF format)

Protecting Foreign Investors C.P. Chandrasekhar & Jayati Ghosh

Bilateral Investment Treaties (BITs), which have proliferated especially for developing countries, have far-reaching and typically negative implications for host country governments and citizens, because of the sweeping protections afforded to investors at the cost of domestic socio-economic rights and environmental standards. Protecting_Foreign_Investors  (Download the full text in PDF format)

  • 1
  • 2