Wednesday, June 07, 2017

Privatising Air India to change the perception about Modi government's reformist credentials

There is a buzz in the air about the possible privatisation of Air India (AI), that quintessential public sector white elephant. Since 1991, this has been seen as the ultimate litmus test of every Indian government's reformist convictions, which none has yet managed to conquer.

That is ironic, since on several occasions the respective governments of the day have managed far more substantial economic reforms. Consider two examples from either end of the 26 years since liberalisation began. First, Prime Minister Narasimha Rao's dismantling of industrial licensing was much more impactful than the government getting out of any one company or sector.

Similarly, the enactment of the Goods and Services Tax (GST) by the present government heralds a seismic shift in India's economy. While Rao deftly used India's looming international repayments default to push through his reform, Prime Minister Narendra Modi had to manage his economic magnum opus without any such crisis for cover.

The former is often appreciated for his shrewd use of the old adage to never waste a good crisis, and the latter deserves similar kudos for sheer persistence. For GST did not arrive on autopilot. No stone was left unturned to make it happen, despite many setbacks along the way, including widespread rumours last year that the government was no longer serious about it.
07/06/17 Baijayant Jay Panda/Economic Times