People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 33

August 13, 2006



Back To The Discredited Path


K Veeraiah


THE government of Andhra Pradesh is to embark upon the discredited path of the same ‘reforms’ that made people desert Chandrababu Naidu’s Telugu Desam and crown Y S Rajasekhara Reddy in the last assembly elections. One recalls that the then leader of opposition and now chief minister, Y S Rajasekhara Reddy had then joined hands with the CPI(M) for an agitation against the World Bank prescribed policies. After the general elections, the CPI(M) had also warned the people about the impending dangers because of the Congress’ approach to these so-called ‘reforms.’ 


Since then, as the state government has had some electoral compulsions, no notable steps were initiated towards the ‘second generation reforms’ in the state. But now, with the completion of the village panchayat elections, the election process in the state has for the time being come to a halt and there are no elections in the state, except the Water Users Association elections, before the assembly elections in 2009. This has prompted the government to unleash its own set of ‘reforms,’ with both the government and the World Bank feeling that this is an opportunity not to be missed. 


It is thus that the Implementation Secretariat (IS), an organ of the World Bank which has got a place in the State Secretariat building to monitor the pace of reforms) has come up with a blueprint to restart the halted process. With this, the YSR government’s much pretended abhorrence for ‘reforms’ has gone to the wind and it has now come out in its true colours. In fact, only to implement a new of reforms, the government has gone to the extent of extending by three years the life of the Implementation Secretariat whose term was due to terminate. 


The state government of Andhra Pradesh has now issued a government order (GO) dated 18/7/2006 numbered 5, which specifies the plan of action to complete the ‘reforms’ involving 30 state public sector undertakings in a phased manner. The Implementation Secretariat wants to finish this action plan in three years. However, if this plan comes into operation, about 30 percent employees in the selected public undertakings would find their way out either by way of the so-called voluntary retirement scheme (VRS) or through outright dismissal. 


The GO, accompanied by a detailed plan of action, poses an immediate threat to Road Transport Corporation (RTC) and Singareni Coalieries, which are profit-making companies. One of these is a public utility and the other a commercial utility. The plan is also in total violation of the Congress party’s electoral promise to fill up the 2.5 lakh vacancies. Instead of taking steps in that direction, now the government wants to abolish 64,207 posts in state public undertakings and cooperatives. 


In support of the proposed ‘reforms,’ the GO also pointed to the steps undertaken by the erstwhile Telugu Desam government to implement the World Bank prescribed ‘reforms’ in two phases, involving 77 institutions and undertakings. Leaving some of these institutions and undertakings out, the ‘reforms’ in the third phase would involve 30 institutions and undertakings in three stages, with each stage marking some organisations and a time stipulation. These recommendations were culled out from the infamous Subramanyam committee report of 1995 and the agreement entered into with the World Bank on February 4, 1999. 


According to the Implementation Secretariat’s understanding, completion of this process in each PSU may take 12 to 18 months. The IS is gearing up to finish this process in at least 10 PSUs before the 2009 assembly elections. It wants to replicate the ‘reforms’ process adopted elsewhere for the power sector --- unbundling in the first phase and sale in the second. 


The suggested reform in the Andhra Pradesh Road Transport Corporation, which has bagged a number of awards for its efficiency on various counts, will be on the same line as in case of the State Electricity Board (SEB). In its very first year of existence, the YSR government appointed a committee headed by Konatala Ramakrishna, which went to Karnataka to study the unbundling process in the KSRTC and came up with the proposal to divide it into 7 independent corporations. 


It is to be noted that this recommendation came in the light of the World Bank prescription to do away with the APSRTC’s monopoly over the routes and increase private participation. Also, the same thing was prescribed to the Jayalalitha government in the neighbouring Tamilnadu. There the TSRTC was unbundled into 21 companies and then sold to individuals. The latter are now regrouping themselves and have formed 7 entities, with the new state government trying to reduce them to 2 entities. It is thus that government monopoly with social obligation is being replaced by private monopoly that does not have any social obligation.


The same is on the cards in Andhra Pradesh. Regarding the APSRTC, the IS says 34,784 “surplus” employees in it are to be got rid of. It will not be out of context here to recollect the Madhya Pradesh government’s decision to close down the MPRTC in order to further private participation. With its somewhat more than 1,000 buses and 12,000 employees, the MPRTC is a very small PSU in comparison to the APSRTC that has well established routes, more than one lakh personnel and real estate properties in the form of bus stations worth over Rs 25,000 crore across the state. In that sense, APSRTC has more worth than most other RTCs in the country. Now the state government wants to sell this very PSU for peanuts.


To oust the 30 per cent of employees marked surplus in the identified PSUs, the government has allocated Rs 1284.14 crore towards VRS expenditure whereas Chandra Babu Naidu had spent Rs 350 crore to oust 23,000 employees in its nine years span. By comparing the steps of both the governments, one can well understand the intensity of ‘reforms’ initiated by the Congress government.


The other important aspect of the ‘reforms’ carried out in Andhra Pradesh is that the money earned by the sale of assets of public undertakings is not shown anywhere in budget documents, unlike the central government’s budget documents showing the disinvestment earnings. The study group on the performance of state public sector undertakings had, in its report, suggested the formation of a state level renewal fund. The authorities did not pay any heed to it either.


The state level public sector undertakings are integral part of our planned economy. Though there has been a need to assess their performance over decades, nobody took it seriously. Now all of a sudden the ‘reforms’ in this sector has became “vital” for policymakers. The World Bank recommendations, imposed through its structural adjustment loan, were incorporated into the Subramanyam committee report and also Planning Commission study group’s report in order to Indianise them, as suggested by James Wolfenson in one of his speeches during his visit to India five years ago. And now it appears that the governments at the centre and in states have achieved mastery over this art of Indianisation. 


However, this ongoing process in Andhra Pradesh should be seen in a wider perspective. Three years ago, power sector ‘reforms’ were adopted by all the states except West Bengal where the government rejected the central power ministry’s proposal to unbundle its SEBs. In the second phase now, the ‘reformist’s are concentrating on infrastructure corporations and utility corporations such as RTCs. This plan requires that PSU employees put up a concerted resistance to it in order to save the state level PSUs from the attack of World Bank prescribed policies. 


At the moment the state government and PSU employees in Andhra Pradesh have got a brief respite from this attack after the government’s plans were brought to public knowledge by the CPI(M) daily Prajashakti and the CPI(M) Polit Bureau member and its state secretary B V Raghavulu fired a salvo on the state government by asking it to scrap the said GO. After this, trade unions and state government employees’ organisations also joined issue with the YSR government. This scared the government which tried its best to mollify the employees, and the chief minister wrote a letter addressing them. Finding itself in a difficult position, however, the government had had to put on hold said GO’s implementation. But the threat remains, and hence the CPI(M)’s demand that it be scrapped altogether.