The Hindu : Privatisation under way

Online edition of India's National Newspaper
Wednesday, Oct 16, 2002

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Other States - Bihar

Privatisation under way

By K. Balchand

PATNA OCT. 15. Even if by default, the process of reforms, giving private enterprise a free hand, is underway in Bihar. While the State Government is struggling to strike the right note, judicial intervention has helped set the direction. The courts have also safeguarded against the rise of private monopoly in some sectors.

With entrepreneurs reluctant to touch loss-making boards and corporations, the Government has found the court rulings for liquidation a welcome option. They have favoured action in the wake of wages bill of over 54,000 employees of 49 boards and corporations remaining unpaid for several years. The proceeds are expected to clear the arrears. The courts have maintained that while the Government was not responsible for paying salaries, it, however, ought to sell the assets and clear the arrears.

Whether the liquidation would suffice to clear the liabilities that far exceed the assets is anybody's guess. The Government has already filed petitions for liquidation of six boards and corporations, including the Bihar State Sugar Corporation, which owns 15 sugar mills. The Cane Commissioner, K.C. Mishra, maintained that the liabilities exceeded the assets several folds. The sale of all assets of these mills, including hundreds of acres of cultivable land, is unlikely to be enough to pay the arrears of over 10,000 employees amounting to Rs. 126 crores and the loans obtained totalling Rs. 265 crores.

The Industries Department has forwarded a proposal to put 22 other boards and corporations on the block. However, employees of such entities, receiving part-payment, are opposing the liquidation move.

External forces seem to dictate the power sector reforms as well, thanks to the internal problems which have reduced the Bihar State Electricity Board (BSEB) to a mere distribution centre. Yet, the objective is to make all the three wings as autonomous as possible within the BSEB, after the NTPC tightened the screws. The Government hurriedly signed an MoU with the centre.

Generation of power is just namesake. That too might whittle down to zero should the NTPC's proposal to buy out the Kanti Thermal Power Station come through.

The restructuring of the transport division too is guided by the ruling of the Supreme Court, which has turned down the Government's privatisation proposal fearing that private monopoly would be detrimental to the public interest. The Government, consequent on the ruling, has purchased 55 buses.

According to the Joint Secretary, B.P. Singh, the Government is all set to clear the purchase of 500 more buses. The funds meant for payment of retirement benefits, on the directive of the apex court, have been diverted to purchasing these vehicles and the arrears would be cleared from the profits earned. The Government has released Rs. 70 crores for the purpose.

Besides, it intends to hire 600 drivers on a contract basis, doing away with the practice of appointing permanent staff.

According to the Medical Education Secretary, Afzal Amanullah, the Government intends to convert all the six medical college hospitals into societies under the Societies Registration Act to grant them autonomy so as to make them viable. The Principal would head the society, which would, of course, have Government representatives on the board.

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