Worst instincts

Why,under the United Progressive Alliance,does even the most basic economic transaction seem to need government action? Why must a statist song-and-dance accompany normal market activity,and everything be presented as requiring a “clearance” or “concession” of some sort? For evidence of the lacklustre commitment to market principles — and to simple,firm decision-making — of UPA 2,consider one example,the Cairn-Vedanta deal. One company wants to buy another. No market-twisting monopoly will be formed,and no shareholders are likely to be unfairly victimised. In a modern economy with a sensible political dispensation,this would not be something that the government would need to concern itself with. But not,it appears,under UPA 2. Edinburgh-based Cairn Energy has waited for months for government approval — not yet forthcoming — for the simple sale of its majority stake in its Indian subsidiary to London-based Vedanta Resources.

And look at the pathetic excuses trotted out for this statist high-handedness. For example,that Vedanta has no experience in petroleum. Big deal. The operating company for Cairn India’s various operation remains: Cairn India. Its UK-based ownership might change — and anyway,why should the government have to take a call on that? This government’s commitment to actual economic independence for the private sector looks half-hearted,and this case is the worst advertisement for India’s economic reform. Nothing is more calculated to create uncertainty in the minds of investors,foreign or otherwise,than the sight of a government that revels in placing obstacles in the way of the market,even as it claims a commitment to liberalisation and reform.

A cocktail of “old India” interests is responsible for this mess. The petroleum ministry has been lackadaisical as a regulator,and over-interventionist otherwise. ONGC,which partners with Cairn India in some of its oilfields,has turned to big brother in the bhavans to try and squeeze a little extra out of the private sector,a reminder that an independent PSU is a contradiction in terms,whatever fancy names from Akbar’s court you may give them. This is a very good indication of the lack of conviction and coherence that has got UPA 2 into a mess,so that normal decision-making appears to be a concession. Why must they drag themselves through every straightforward decision kicking and screaming?