Thread by @aye_kaash

Arguments against privatization from the political coterie show that even 3 decades since economic reforms, a significant section of India's media, political and bureaucratic class is steeped in the ideology of control. A 🧵responding to @varungandhi80's piece in @the_hindu (1/n)

.@varungandhi80 starts piece by what seems like a call 4 fiscal prudence, gets back later by stating gov has failed to raise significant funds thru privatization. Obv answer shd be to amp up prvtn, but wait the entire article argues against it.🤔 (2/n)

thehindu.com/opinion/op-ed/…

He goes on to cheerypick instances from across the world in cases where the pvtn didn't lead to significant improvement in performance. What he doesn't understand is even that's a success since it's no longer a drain on public exchequer. (3/n)

Claims that growth post-privatization is due to multiple factors like better funding under a private promoter. No Shit Sherlock! This doesn't help your case, but shows that the capital markets have more faith in a private promoter & management. (4/n)

Gives an example of how an auction for 21 oil & gas blocks had only 3 firms participating with 2 of them PSUs. Oil & gas have been sectors with a govt. monopoly for the longest, private enterprise was explicitly barred up until a few years ago. (5/n)

He invokes Maruti model where gov divested slowly. @varungandhi80's father should be infamous for Maruti as well among other dirty deeds. It serves as a reminder of how PSUs became vehicles of corruption, nepotism & incompetence in post-1947 India. (6/n)
m.motoroids.com/article/maruti…

Then, the article moves on to talk about "social consequences" of privatization by which he means layoffs (that are much needed). It immediately reminded me of Milton Friedman's spoons vs shovels story. (7/n)
aei.org/carpe-diem/mil…

The article further complains about growing market concentration. Market concentration has been the highest in sectors that opened up late, where govt had a monopoly and/or still retains a PSU. That can't be a coincidence. (8/n)

He cribs about privately operated airports (sigh, one look at airport premises & you can tell if it's a swanky private one or shitty AAI operated). He says pvtn of public assets lead to higher usage fees, as in telecom (Wait, when did we sell BSNL?) (9/n)
deccanherald.com/opinion/a-case…

Concludes with examples from 🇨🇳 & 🇸🇬 where corporatized PSUs hv worked well. Importing "best practices" without understanding context wreaks havoc. Both r miles ahead of 🇮🇳 in #StateCapacity & as @srajagopalan says, "State Capacity freed is State Capacity built". (10/n)

Yes, time's come to take a relook at privatization. Time has come to ask tough questions-
Why is progress on it slow? Why are poorest of the poor made to pay taxes to sustain inefficient PSUs? How to make it unpopular to cash in on "dispersed benefits, concentrated costs"? Fin.