Privatise by all means. But the issue is the turnaround of PSUs under private control, their modernisation and future drive. One does not get to hear much about the vision of the capitalists aspiring to acquire control of PSU assets. The reason perhaps is privatisation has so far meant incrementally small doses of divestment of government equity.

But things are changing. Indian Airlines is now on the block. One of the contenders is Videocon; and its chairman, VN Dhoot, has held out a vision for Indian Airlines. The salient points (reported by UNI in FE of December 6) are: a 30 per cent slash in air fares; a consequent trebling of demand for air travel; and significant fleet expansion (by 45 aircraft). Reform has so far been associated with tariff hike and downsizing. Mr Dhoot is promising the exact opposite. Hopefully, other contenders (the Tatas and the Ambanis) will come out with their vision.

Hype? Mr Dhoot explains that Indian Airlines is trapped in the vicious circle of high fares and low aircraft utilisation; so it is unable to capture the demand for air travel, especially local air travel. (The point about local air travel demand is significant: economic growth is significantly high in parts of the north and the south and notably in the west).

It is true that air fares in India are very high and deter demand. But Indian Airlines is no longer a monopoly. There are private airlines, and one of them has very high visibility. They should have nudged Indian Airlines out of complacency.

They did not. They joined in the game of keeping fares high. Indian Airlines helped by remaining inefficient. This is a classic case of the least efficient (PSU) enterprise helping out the somewhat less inefficient (private) ones. There is a sense of deja vu in this relationship. Indian Drugs and Pharmaceuticals (a PSU) was the highest cost producer of medicines; private drug manufacturers had a field day.

PSUs were supposed to act as a countervailing power against rapacious private enterprise. IDPL and many other PSUs failed to measure up. Roles were reversed under liberalisation. Indian Airlines was to be chastened by competition. But the competitors-Mr Dhoot reportedly mentioned Jet Airlines in this context-joined in the game of keeping fares arbitrarily high. Indeed, this is the raison d'etre of the Dhoot vision.

The problem is oligopolies. Industrial licensing helped establish them. Liberalisation should have ushered in a different regime. But as in the case of domestic airlines, private entrants get accommodated by mega PSUs. It is not very different in banking, is it? Can there be a new deal in other industries, say, steel?

The Dhoot vision is important. Undoubtedly, the Tatas and the Ambanis could project comparable visions. May the best of them win. But will privatisation necessarily break the oligopolistic framework in key industrial sectors? The cosy relationship between PSUs and private entities will end; but what is the guarantee that post-privatisation, competition will come to the fore?