Saturday, September 08, 2007

Prime Minister's Independence Day Address -- Part 3

Economic Development [Continued from previous post]

This Government believes that the role of Government in economic activity is not that of a principal industry player or provider, because Government has neither the expertise, nor the capacity to run each and every sector.
Instead, the Government's role in this area should principally be safeguarding the interest of the single largest community -- consumers.

Hence, my Government, over the next 5 years, and in particular, over the next 100 days will begin the process of relinquishing Government control and management of several such companies while establishing strong regulatory mechanisms -- such as self-funded independent regulators.

Depending upon the scale of the Government-owned enterprise in question, small assets (those below 1 billion dollars in value) will be put under public ownership on our capital markets directly.

The divestment of larger companies will be overseen by Special Purpose Vehicles (SPVs) that will oversee the gradual transfer of management and assets to professional management. Some of these companies include National airlines, state-owned metal and mining companies and entities like the Food Corporation of India.
In line with our overall economic thinking, we believe that while the services of these companies are important (e.g. FCI provides basic rations to our poorest citizens), Government can not and should not be running them as monopolies. Hence, some of these companies, will not be sold en bloc but as de-merged agencies that will have to compete for resources (e.g. such as food vouchers).

Finally, even as the Government reduces its role in running enterprises, some enterprises operate in sectors of vital strategic importance. These include companies in sectors associated with natural resources (water, minerals) and energy (e.g. oil and gas) and with some critical national installations (e.g. Ports).

We believe that like in other sectors, daily management of these companies should not be a concern of the Government, but, given their strategic importance, Government should continue to own them in significant measure.

To ensure strong strategic management of these companies, ownership of these companies will be divested from their parent ministries and transferred to a holding company that is responsible for the management of these entities. We believe this separation of company ownership from the regulating ministry is essential to establish an 'arms length' relationship. This is to ensure that no player gets privileged access, ensuring a level playing field.

These holding companies will be placed under the direct management of Bharat Uday -- a Sovereign Strategic fund that will own these government assets. Bharat Uday will be staffed with the best and brightest Indians who will be tasked with professionalising the management of these companies to ensure that they compete with the best companies in the nation while earning the Government top-quartile returns. Returns from companies owned by Bharat Uday will be utilised to further strategic interests by investing in vital assets worldwide -- such as oil and gas reserves.
To ensure Bharat Uday meets its strategic objectives, it will be accountable directly to the Prime Minister and the Cabinet. We believe such a construct will add an altogether new dimension to India's National Interest -- that of Strategic Security earned by Economic power, in addition to military power.

Social Reforms

Finally, my Government will extend its philosophy of establishing clear roles for Government (regulator, provider or financier) to the Social Sector.
We believe that in the Social sector, the role of Government is exclusively as a regulator that establishes a fair and level playing field for all citizens -- irrespective of their differences.
To that end, my Government will focus on reforming or, in some cases, altogether eliminating rules and laws that create distortions, driving wedges between peoples.

It is my belief that initiatives designed to address perceived deficiencies or weaknesses of communities or sectors of society by providing selective benefits against these perceived deficiencies have only succeeded in highlighting these deficiencies, driving a wedge among communities.

For instance, laws such as Article 30 -- expressly discriminate against Hindus by disallowing Hindu organisations from running Schools and Colleges, simply because they are a majority.
This has effectively made Hindus a disadvantaged community, dependent upon Schools operated by other communities for their education. In addition to being discriminatory, such policies artificially reduce the number of schools in our nation.

However, merely removing discrimination is not enough: government must also actively enforce fairness and justice.
Hence, even as social services are given additional freedom, they will now be expected to conform to regulation. Just as our companies must meet norms of probity and accountability, so must our social sector. To that end, a social sector regulator will be established to ensure that all Social organisations -- NGOs, Religious institutions of all denominations and not-for-profit institutions will be required to declare their accounts and activities to the public, in a prescribed format.
This is particularly important, given alarming evidence of the involvement of several NGOs and religious institutions in activities detrimental to India's -- and her citizens' -- welfare and security.

These are our priorities for the next five years: security, education, healthcare, economic development and social sector reform.

In conclusion, India embarks on another illustrious year in her dramatic 6,000 year history. All the Indians I have spoken to in the past few months have been clear that they want this year to be different. A year when we shall promise to our children -- and their children -- an India of unparalleled security, prosperity and opportunity.
Making that difference -- and delivering on that promise -- is a massive challenge. It is now upto us all to deliver.

Jai Hind.


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