Privatisation of Government Banks : Pros,cons

 insurance Sector Privatisation

in a country like india , We should take insurance especially ,general insurance and also to a certain extent life insurance which comes in the form of a pension to people in retirement should certainly be in a more welfare oriented measure such that the common man benefits when we talk about a welfare oriented touch to business.  The private sector will always shy away from welfare so it is the public sector which will have to get into it.

Governments is  just trying to absolve itself from wealth creation ,absolve itself from profit making and get into just spending money which they are kind of getting through taxes and and getting through monetization.

 Why are government not made responsible for creating wealth ?

india never really had a  very clear policy on wealth creation . We started with a hybrid model of socialism ,capitalism and we failed on both the fronts.  Moreover, worldwide except for creating infrastructure ,where return on capital is sometimes overlooked because you need it, you can’t do without it. the governments worldwide have tended not to give returns on capital invested.iit’s so with india ,it is so with america , it is so everywhere .So when we  talk about creation we think it is the private sector which has always been given that role . But since there was little clarity.

 in 1991 then we had reforms which said you have to be giving privacy to the private sector but down the line once we  look at the kind of interference that the government does and businesses through all kinds of regulators ,regulations laws even that gets impaired so wealth creation has been stunted because of that in india .

Is the government trying to create wealth ?

is it facilitating wealth creators ?

when the indian prime minister goes to america, the americans ensure that a couple of deals are signed with india. Americans ensure that india goes and they get a couple of deals for themselves. We as a country give a couple of contracts to america ,so was the case with israel ,we saw how Netanyahu who treated our prime minister. But,whenever our other leaders comes to india, where do we get them to sign any contracts ?  where do we get them to sign any trade agreements  There is no pressure on the government to create wealth

A sense of trade and diplomacy was certainly missing we had some kind of a pseudo noise and motion and the others took advantage of it.  We also had a notion that you can’t have what Trump started very openly a transaction oriented diplomacy which is you do transactions for me and i’m going to be good to you.

We  think it is time for india to at least have a more clearer shift to this that diplomacy and trade must go together and the interests of india must be given priority over those of anybody else. a any relationship that we follow should be that of a trade relationship because it should benefit the people of india .

having a great relationship, having fantastic events how does that help india ?  in any form or you know in any way  ?

so the fact that you know that is something that We think there should be an attitude shift .

Privatization and disinvestment

privatizing monetizing and disinvestment have political challenges .

It is very easy to make this statement but when it comes to the actual delivery, there are a lot of hindrances.  valuation one of the reasons air india never got sold. Air india valuation was too high. The government was expecting that a bankrupt loss-making airline will give it a value of Rs 50 000 crores, it didn’t deserve all those zeros that they were trying to add . So, valuation becomes a big deterrant.

the second thing that we have seen is tha when the maharashtra government decided to allot the new plot in kanjurmarg for a metro site . the central government came and said that this land belongs to central government  and they couldn’t do it. So, the next issue is politics.

An  very interesting , scooters india is  being sold off and it has some prime land near lucknow .The sad part is that the government is not even able to identify which is the parcel of land that belongs to scooters india . it is that pathetic .So, first challenge is valuation, the second is trade union , the third is politicians , the fourth is the title related issues. It is not easy selling government assets  from a very political perspective .

The fifth is with the government interest being involved nobody wants to bid for it. like NHAI has been trying to sell roads, it had a target to sell roads worth about Rs 30 000 crores a year. They couldn’t even manage one third of that .

so politically how would these challenges be met to ensure that privatization and disinvestment and monetization takes place ?

if the government wants to sell something it sells very easily ,so many airports were privatized easily no problem, no hindrance ,

profit making

so whichever project is profit making there is no hindrance. wHERE there are problems there is bound to be deterrance and there is bound to be problems. the biggest hindrance is whether the company is making profits. whether the company is conducive to a profitable kind of an environment .

or it is basically you know living in this uh in this attitude you know management attitude of suffering losses and you know uh kind of being a typical psu that’s the that’s the point

are we going to be india private limited ?

We  don’t see it happening. We don’t see it happening is the vested interests of politicians and political parties are so deeply entrenched in the economy . They make tons of money out of it or they are able to virtually blackmail us by all kinds of legislation.

 By virtue of the fact that financial interests are involved .entrepreneurs are entrenched with their investments in it. At no point of time, with the parliament of india consisting of all the parties get together and say let’s work towards india private limited It  will become all kinds of parties .private limited india IS not going to happen

Privatization Monopoly

of course look at it as failure of our political system and failure to keep a check on the government

We are not one who advocates that you know private sector is the solution of everything .  we have seen enough corruption and fraud in the private sector all the time .

the point of differentiation is that there is a pressure of accountability, transparency and return on investment on the private sector which is missing in the public sector  and that is why we end up favoring it.

 But otherwise if a private sector also does not have accountability or transparency or any kind of account the return on investment pressures you will have the same mismanagement that happens in the public sector.

 Hencem we are trying to emphasize that getting that kind of management which has accountability and force on it which is forced  to get into transparency and return on investment.

 Because the government does not have any of ROI,transparency question in its public sector enterprises. This is where we say privatizing  should do show on mismanagement per se the concept of mismanagement no i i’ll tell you why because somewhere down the line the people who were made to head these private sector banks psu banks were bureaucrats they were IAS  officers who were taught administration

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