Winds of change that usher in new hopes

Updated: Feb 29 2008, 05:54am hrs
The Economic Survey 2007-08 has suggested a number of far-reaching policy measures including overhauling the countrys foreign investment regime, allowing longer working hours and divesting governments stakes in public sector companies.

The Survey has also called for listing all unlisted public sector enterprises and selling at least 10% government stake to the public as well as auctioning off all loss making PSUs that cannot be revived.

And for PSUs with a Zero net worth, the Survey has recommended negative bidding in the form of debt write off.

The reform options, while showing a clear road map may, however, stir a hornet's nest for the government especially with general elections looming ahead.

Chief economic adviser to the finance ministry Arvind Virmani, however, said these suggestions are not policy recommendations but are only options or a list of possible ideas. The main concept behind them was to generate debate, he said.

Some of the far-reaching reforms like introducing a 60-hour work week and carrying out its agenda of disinvestment could see stiff opposition from workers unions. The government is likely to face stiff opposition from the Left parties on disinvestment of state run companies and increased private participation in key infrastructure sectors.

Sixty-hour a week work would mean setting a new precedent with workers expected to clock 12 hours of work a day. This would help meet seasonal demand through overtime, the Survey said. Most of the countries, including the developed follow a 40 to 48 hours working week.

Besides, the Economic Survey has also advocated introducing a separate section on Bankruptcy in the Company Law or a Bankruptcy law to facilitate the exit of old and failed management as quickly as possible.

According to the Survey, reforms can be brought in to the infrastructure sector by selling old oilfields to the private sector, who can bring in new technologies for enhancing recovery from the old oilfields.

The Survey recommended amending the Coal Mines and Nationalisation Act to allow regulated private entry into coal mining. It has also suggested privatising old coal mines to improve recovery of reserves by 5%-10%. This should be subject to a professional independent regulator for safety and environment issues.

Public sector rail track companies should be permitted to own new tracks and signals and there should be free entry of private and public-private partnership in rail freight companies, the report has recommended.

The Survey also advised for private ownership of public transport systems and metro rails. The review of the economy has also suggested that open access should be permitted in the power sector by empowering state electricity regulatory commissions. It has also said the government should consider permitting private corporate investment in nuclear power, subject to regulations.

It has also suggested phasing out government control on the sugar industry, for which officials set a monthly free sale quota, and the pricing of fertilisers and drugs.