The future of Air India, the state owned carrier, is uncertain, to say the least. The government has indicated that it will have to be closed down if it cannot be privatized through strategic disinvestment by end-March when the current financial year ends.
An initial attempt to sell 49 per cent drew a blank as did a subsequent attempt to sell 76 per cent. But with Jet Airways having failed to find a buyer so far and the escalating economic slowdown affecting business prospects for all, this may be perhaps the worst possible time to get rid of a large non-profitable government owned airline one of whose chief weaknesses is too many staff.
Despite the fact that privatization may save a good number of jobs and government promise of an acceptable package to serve the interests of all the employees along with privatization, Air India unions are making a last ditch attempt to stop privatization. And they have not hesitated to call the organization a “jewel”. So it is necessary to repeat some of the by-now ancient arguments in favour of privatization.
The foremost is that the business of government is not to be in business which is best left in private hands. For the private commercial space, the government’s foremost duty is to ensure competition by removing market imperfections and promote the free flow of information so that all stakeholders can take informed decisions.
The government has enough on its hands. Some of its foremost tasks is to ensure the delivery of public goods like health and education. A role for the government may indeed be needed in areas which tend to be natural monopolies like utilities. In such situations where there is a single service provider, the absence of the disciplining effect of competition can be substituted by government regulation.
23/12/19 Subir Roy/Moneycontrol.com
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An initial attempt to sell 49 per cent drew a blank as did a subsequent attempt to sell 76 per cent. But with Jet Airways having failed to find a buyer so far and the escalating economic slowdown affecting business prospects for all, this may be perhaps the worst possible time to get rid of a large non-profitable government owned airline one of whose chief weaknesses is too many staff.
Despite the fact that privatization may save a good number of jobs and government promise of an acceptable package to serve the interests of all the employees along with privatization, Air India unions are making a last ditch attempt to stop privatization. And they have not hesitated to call the organization a “jewel”. So it is necessary to repeat some of the by-now ancient arguments in favour of privatization.
The foremost is that the business of government is not to be in business which is best left in private hands. For the private commercial space, the government’s foremost duty is to ensure competition by removing market imperfections and promote the free flow of information so that all stakeholders can take informed decisions.
The government has enough on its hands. Some of its foremost tasks is to ensure the delivery of public goods like health and education. A role for the government may indeed be needed in areas which tend to be natural monopolies like utilities. In such situations where there is a single service provider, the absence of the disciplining effect of competition can be substituted by government regulation.
23/12/19 Subir Roy/Moneycontrol.com
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