Thursday, July 9, 2009

Disinvestment; and number crunching on budget

There were two very excellent articles in The Hindu today.

The first one (click here) is related to the disinvestment policy that the UPA government is proposing to follow. Siddarth Varadarajan begins with why some of the decisions of the NDA government failed and then continues to suggest how to get back to the basic principles. I felt this article is a very good one to gather a nice understanding of the process.

A brief excerpt:

"Before going down this route, however, it is essential that the case for privatisation be discussed anew from first principles. And that this discussion be conducted rationally, without the free market dogma and leftist sentimentality that has tended to cloud the real picture. Broadly speaking, one needs to ask four questions. First, is public ownership of industry inherently inferior to private? Second, is private ownership the only way to deal with managerial inefficiency? Third, is there a difference in the positive and negative outcomes produced by privatisation through the strategic sale route and through the sale of shares to the public? Fourth, is plugging the fiscal deficit a sound rationale for disinvestment?"

The second one (click here) is related to the number crunching from the Budget 2009. S. Gurumurthy exposes some of the claims made by the FM in his speech, and provides us with concrete numbers to prove why the increase in deficit has less to do with "fiscal stimulus" and more to do with subsidies etc. He ends the article on a very interesting note - "But that calls for a different leadership which no party in the country seems to possess."