INTERFACES

Disinvestments in India: presents articles focusing on managerial

applications of management practices,
theories, and concepts
Needed Change in Mindset
Vipin Malik

Executive Summary In the nineties, India’s budgeting, fiscal deficits, and balance of payments problems kick
started the government’s urge to unlock the huge investments chained in the state-
owned enterprises (SOEs). The blueprint was the successful global model of privatiza-
tion/divestment which was initiated by Margaret Thatcher in the eighties in the UK and
implemented by other countries including Unified Germany, former USSR, the erstwhile
socialist countries, Western Europe, Canada, Japan, and even China. The developed
nations attained a high level of success followed by the developing and the least
developed countries.
While developed and OECD countries opted for Initial Public Offerings (IPOs),
Russia adopted a system of vouchers for buying shares of public sector companies at
auctions, and smaller states in the former Soviet Union and East European countries
opted for trade and negotiated sales. Developing countries like Brazil and Chile made
principal divestments of significantly large government stakes with no reservations to
pass on control to foreign investors. Greece and Korea opted for convertible bonds.
Considering that the debate on the need for disinvestments is very old, the question
is: is there anything new and is there a game plan? Also, why is the media hesitant in
presenting analysis of the decision-makers’ mindset? It leads to the inference that the
implementers have perhaps little commitment to disinvestments which is in contrast to
what Hungary and China have achieved by their professional approach. Fortunately, the
efforts to pursue reforms have not openly been reversed or given up by any government
of the day.
The Four Ps of disinvestment – Policy, Promise, Prognosis, and Performance – look
grim. In the recent past, we have been witnessing a lot of debate on the disinvestments
scenario suggesting dynamic movement. In reality, the sale of equity of only 49
companies has so far been accomplished (a few only privatized). In comparison,
Hungary identified 1,288 SOEs, transformed them into companies for privatization, and
in 2002, only 79 companies were left for privatization.
Against a target of Rs 100 billion, the financial year 2000-2001 closed with a
collection of Rs 18.70 billion. Against a target of Rs 120 billion, the financial year 2001-
2002 closed with a collection of Rs 56 billion inclusive of special dividend of VSNL at
Rs 18.87 billion and Rs 11.54 billion of IBP bought by another public sector undertaking
(PSU). Against a target of Rs 120 billion, the financial year 2002-2003 closed with a
collection of Rs 33 billion. The target for financial year 2003-04 is Rs 132 billion (US$
2.87 billion).
To set things on the recovery path, introspection on what aberrations have entered
the system is necessary. In the words of the President to the Joint Session of Parliament
in February 2002, “….. The prolonged fiscal haemorrhage from the majority of these
enterprises cannot be sustained any longer.….”
KEY WORDS How do we ensure that the disinvestment process is on track? The following five-
Disinvestment point agenda would be useful for policy-makers:
Ø Trust the homegrown expert for implementation.
Privatization Ø Place administrative control in the hands of the Finance Minister.
Competitive Populism Ø Hand over companies that are a burden on the government to the employees.
Ø Do not involve a PSU/SOE in the bidding process.
Promise-Performance Gap Ø Manage revivals professionally.

VIKALPA • VOLUME 28 • NO 3 • JULY - SEPTEMBER 2003 57

N
ecessity is the mother of invention. It is a trui- nearly 13.5 per cent of the Indian GNP (year 1999, US$
sm which in the year 1991 triggered the poli- 465 billion) and about 0.2 per cent of the world GNP (year
tico-economic thinking of the then government 2000, US$ 32,892.5 billion). This is also amply confirmed
leading to ‘liberalization’ – a historical policy shift. The by the world-wide distribution of privatization endeav-
Nehruvian ‘commanding heights’ concept was seen to ours (Figure 1).
have lost its relevance. The serious budgeting and fiscal Specific privatization endeavours by different coun-
deficits of the government and severe pressure on the tries are as follows:
country’s balance of payments created the ‘necessity.’ This • Developed countries opted for IPOs banking on the
led to the opening of the window of Foreign Direct In- strong capitalization potential. Foreign ownership
vestment (FDI) and liberalization of trading practices and was allowed in privatized companies by most na-
procedures. The government realized that there was an tions.
opportunity to unlock the huge investments chained in • OECD countries followed a similar pattern as the
the SOEs – the PSUs — which had become lethargic and developed countries with some exceptions. Strate-
inefficient. They suffered due to inertia, spread, and ab- gic sales to bring in management know-how and new
sence of pressure of stakeholders (the President of India technology dominated the process in 2002.
was the invisible owner), compulsions of political man- • Smaller states in the former Soviet Union and East
agement, perceptions of the public and trade union, poor European countries opted for trade and negotiated
work culture of the employees, and lack of accountabil- sales.
ity on the part of the decision-makers. • Developing countries like Brazil and Chile made
principal divestments of significantly large govern-
GLOBAL INITIATIVES
INITIATIVES ment stakes.
The global trend towards privatization began in 1980s • Russia adopted a system of vouchers for buying
with Margaret Thatcher spearheading the privatization shares of public sector companies at auctions besides
doctrine and implementing it with tremendous success using for housing also.
in the United Kingdom. Unified Germany, former USSR, • Greece and Korea used convertible bond in privatiz-
the erstwhile socialist countries, Western Europe, Cana- ing state-owned assets.
da, and Japan replicated the pattern. Even China aban-
doned Marxism and partially accepted market economy TWO ILLUSTRATIVE GLOBAL EXAMPLES
ILLUSTRATIVE
and private sector production. Developing nations did In contrast to the fluctuating mindset witnessed in the
not lag behind. The developed nations attained a high Indian context, two illustrative examples are cited here
level of success followed by the developing and the least to outline the professional approach adopted by Hunga-
developed ones in that order. In early 2000, the estimated ry and China.
target set for the year 2000 for the developing nations
The Hungarian Initiative
was reported to be US$ 100 billion of privatization pro-
ceeds (Table 1). Hungary is an example of a transition economy which
While the Indian government is still debating on the has fairly succeeded in its privatization initiatives. In 1995,
benefits of privatization, the trend continues to sweep
Table 2: Details of Industry-wise Privatization
the world and pass us by. The details of world-wide in-
dustry-wise privatization (recently compiled) are given Industry US$ Million % of Total
in Table 2. Telecommunications 13,975 22.20
The total figure of US $63 billion is significant and is Power utilities 11,573 18.40
Energy 10,611 16.80
Table 1: Target of Privatization Proceeds for 2000 Tobacco 7,775 12.30
Insurance 7,482 11.90
Country Target (US$ Billion) Banking 4,465 7.00
Taiwan 10 Vehicles 2,094 3.00
Thailand, Philippines, Korea 10 Steel 1,899 3.00
West Asia 40 Mining 1,661 2.60
Latin America 25 Coal 1,497 2.40
Eastern Europe, Turkey, Poland 10-15 Total 63,036 100.00

58 DISINVESTMENTS IN INDIA: NEEDED CHANGE IN MINDSET

Figure 1: Privatization Endeavours
Asia Eastern
Europe
Pacific
18% 17%
Latin
America
14%
Others
4%
Western Europe
47%
an enactment by the Hungarian Parliament set the tone
for sale of SOEs’ assets. Private ownership, diminution of
state-ownership, allocation based on market conditions,
and reduction of the economic role played by the state
constituted the stated objectives. Transfer of state assets
was made over temporarily to a state holding company
(APV RT), with the purpose of sale thereafter. APV RT
became the administrative repository of the entities slat-
ed for disinvestments/privatization.
The Key Privatization Criteria
The considerations identified were:
• Increase in the efficiency of management.
• Reduction in the shortage of capital in the economy.
• Provision of capital increase.
• Acquisition of advanced techniques at the interna-
tional level.
• Management and marketing experience.
• Acquisition of new markets and preventing loss of
markets.
vestments account for US $ 5252.8 million in ten years
which is about 9.64 per cent of the country’s GDP for
2000. An annual average of one per cent of GDP for the
year 2000 is no mean achievement. On the other hand,
the Indian annual average proceeds are less than Rs 20,000
million (US $ 0.4 billion) in the decade 1991-2001. This is
0.1 per cent of the Indian GDP in 1999 which is one-tenth
of the Hungarian performance.
Modalities of Sale
• The sale could be performed directly; through a sys-
tem of institution of the capital market; and through
investment funds and investment firms.
• The APV RT could be sold through public or exclusive
tender; public auction; public offering; private
offering; sale at the stock exchange; and without com-
petition in exceptional cases.
Status in the Beginning of 2001
The progressive privatization of the Hungarian SOEs by
the year 2000 offers an interesting case study. From a total
of 1,859 enterprises, 1,230 had been sold off by January
2001. Through sale (two-thirds of the original 1,859), liq-
uidation, transfers, and winding up, the current number
is reduced to 172 out of which only 79 (4.25% out of the
original 1,859) are left for privatization. The remaining
93 enterprises have been retained for state ownership with
86 under majority state ownership and seven under mi-
nority ownership (Table 4).
Chinese Example
China represents a fully doctrinaire regime which unique-
ly achieved the same objective with acceptable success.
Table 3: Foreign Investments

• Recognition of the interest of foreign investors with Cases HUF US$ Share %
particular regard to strategic (professional) investors. billion million

• Promotion of acquisition of assets by employees and Germany 107 292.56 1303.20 24.80
USA 45 160.44 714.70 13.60
buy-out by managers.
France 43 103.25 459.90 8.80
• Support of acquisition of assets by domestic entrepre- Austria 117 60.91 271.30 5.20
neurs particularly in the agriculture and food indus- Belgium 11 53.45 238.10 4.50
try. The Netherlands 19 43.84 195.30 3.70
Italy 29 34.88 155.40 3.00
• Provision of appropriate policy for employment, com- UK 34 20.04 89.30 1.70
petition, and environment. Switzerland 18 18.39 81.90 1.60
CIS 17 10.23 45.60 0.90
Foreign Investments since 1990
Foreign
Sweden 13 5.74 25.60 0.50
Global investors joined the Hungarian privatization ef- Finland 2 6.30 28.10 0.50
fort between 1990-2000 to the tune of US$ 5.25 billion Ireland 2 5.60 24.90 0.50
Others 35 6.72 29.90 0.60
(January 2003 exchange rate) (Table 3). In the year 2000,
International shares 34 356.90 1589.80 30.30
the sales to all investors had been US $90.6 million in 43 Total 526 1179.25 5252.80 100.00
companies. The privatization proceeds from foreign in- GDP 2000 54500

VIKALPA • VOLUME 28 • NO 3 • JULY - SEPTEMBER 2003 59

Table 4: Status of Privatization of Hungarian SOEs balance sheet was analysed.
SOEs Total Number
If the bank’s due diligence is successful, it would be
(1,859) for the first time that a foreign institution would be al-
January 1990 Increase 1 lowed to lead a Chinese bank. Even before the comple-
Decrease 85 tion of the takeover talks, the bank’s board of directors
Net decrease 84 84
December 2000
passed a resolution to give full management control to an
Operating SOEs 3 eight-member committee of executives appointed by the
In liquidation 136 foreign institutional investor.
Final settlement 16
Considering that Chinese banks, especially the large
SOEs wound up 332
487 487 state-owned banks which control more than 80 per cent
SOEs transformed of the country’s banking assets, are saddled with huge
into companies 1,288 1,288 non-performing loans and lag behind their international
Number of total SOEs as on
January 1, 2001 1288 competitors in the quality of their risk management, prod-
Operating companies 420 uct development, and customer service, the move to bring
Transferred from other in a foreign institutional investor into the formerly state-
asset management organization 40
Decrease 90 controlled bank indicates the professional approach and
370 370 zeal of the Chinese government. This step is likely to
Total number of companies clean up the bank’s balance sheets and introduce a better
on January 1, 2001 1,658
In liquidation 91 risk management system.
Final settlement 13
Wound up 152 INDIAN MINDSET ON DISINVESTMENTS
100% privatized 1,230 SCENARIO
1,486 1,486
Operating companies (Current) 172 The Indian approach to disinvestments seems to have
To remain under long-term 93 gone wrong being positioned in the middle between the
state ownership composed of: 93
doctrinarian extreme on the one end and the laissez faire
Majority state ownership 86
Minority state ownership 7 extreme on the other. The country seems to have lost both
Left for further privatization 79 the opportunity and the direction, and the pace is poor,
lethargic, and lacklustre. While all political parties and
Indian policy makers have often quoted China as an ex- economists believe in the principle of divestments/pri-
ample of successful disinvestments. The country received vatization, they devise escape routes for non-implemen-
FDI worth US$ 45 billion last year as against approxi- tation by taking recourse to statements such as: “We agree
mately US$ 2 billion by India. Some examples are given in principle but differ in the details;” “First bring in a
below: strategic partner and then divest;” “First increase the
Banking Sector equity base through a public offer and then divest;” “It
is videshi, swadeshi;” etc.
The Chinese government approved in principle the sale
The industry and business express their doubts about
of a stake in a bank to foreign investors. The bank ack-
raising such huge funds to buy out and acquire PSUs. The
nowledged in a disclosure filed with the stock exchange
foreign investors are critical of the entire process and are
that it had contacted several foreign institutions about
often seen withdrawing from the bidding process. In es-
forging a business alliance or selling an unspecified stake.
sence, there is something seriously wrong in India’s ap-
Bidders all over the globe expressed their interest which
proach to disinvestment and implementation.
included a foreign institutional investor who offered more
cash compared to others and emerged as the front-run- Bumpy Ride on the Road to Disinvestments
ner. He was short-listed and handed over the manage- The change process in India began in 1991-92 and, in that
ment control of the bank for doing due diligence. This year, 31 selected PSUs were disinvested totalling an ag-
marked the first step in what is a landmark deal for in- gregate equity of Rs 30.38 billion. The shares were of-
creased foreign participation as no cash was received nor fered to mutual funds, financial institutions, workers, and
any value put upfront. Only the track record of the for- the general public. In the decade 1991-92 to 2000-01, the
eign institutional investor along with cash resources and total rose through a ritualistic mode to Rs 203.21 billion
60 DISINVESTMENTS IN INDIA: NEEDED CHANGE IN MINDSET
(a dismal annual average of about Rs 20 billion). The cu-
mulative target till 2002-2003 set at Rs 783 billion yielded
Rs 293.07 billion – a success rate of 37.43 per cent. The
target of Rs. 132 billion (US$ 2.64 billion) for the current
financial year again is in an anaemic state. This indicates
that the implementers have shown very little commit-
ment to disinvestments.
View through the Media Window
Window
News, views, and criticisms expressed in the media in the
recent past reflect the haphazard and overbearing char-
acteristics of the disinvestment process and application.
Prominent disinvestment participants that were covered
in the media were:
• Oil and Petr ochemicals: IPCL, RIL, ONGC, BPCL,
Petrochemicals:
HPCL, MRPL, IOC, IBP, GAIL, EIL, and Tide Water
Oil Ltd (TWOL).
• Tourism and Hotels: Airport Centaur, BHPL, ITDC
hotels in Patna, Bhubaneshwar, Jammu, and Jaipur.
• Communications: TATA and VSNL.
• Others: Modern Foods, HTL, Paradeep Phosphates,
Hoogly Printing, Hindustan Newsprint Ltd. (HNL),
Larsen&Toubro, Instrumentation Control Valves Ltd.
(ICVL), Balco, Rashtriya Chemicals & Fertilizers,
Hindustan Cables, and National Building Construc-
tion Corporation.
The following specific criticisms were expressed in
the media:
• The government’s approach lacks consistency.
• There is a tendency to put the responsibility on the
administrative machinery whenever things go wrong
and claim credit for the disinvestment department.
• There is an old policy that was not trusted by the
constituencies: structuring the guidelines for the
takeover of PSUs by management or employees.
• Even after the sale, buyers are asking for partial re-
fund of sale price on the ground of hidden losses.
Shareholders’ agreement and sale agreement are al-
leged to be suspect. Global advisors have shrugged
off their responsibility.
• Demand has been made for review of the valuation
and the process of due diligence done by the pre-
dominantly foreign, big league financial advisers to
the Disinvestment Ministry.
• If the government desires to get wide public support,
it should convince the public that it is getting the best
value and that the process is in accordance with the
law.
VIKALPA • VOLUME 28 • NO 3 • JULY - SEPTEMBER 2003
• Utilization of the disinvestment proceeds is yet to be
stated in an explicit blueprint. The first report by the
Disinvestment Commission recommended that the
proceeds be used for building rural infrastructure
like schools, houses, etc. through a Disinvestment
Fund. This remains a dream. The Finance Ministry
does not have the money for any investment. Almost
all the revenue goes in servicing of debt, administra-
tive expenses, and subsidies.
• There is no policy on the PSUs having no disinvest-
ment partners. For example, Scooters India, Praga
Tools, Bharat Pumps and Compressors, Hindustan
Cables, Bharat Leather Corporation, RBL, National
Industrial Development Corporation, and Bharat
Brakes & Valves belong to this genre.
DISINVESTMENT
DISINVESTMENT:: POLICY
POLICY,, PROMISE,
PROGNOSIS, AND PERFORMANCE
The current disinvestment scenario in our country
presents a gloomy picture. So far, only 49 companies have
been disinvested. In comparison, Hungary identified
1,288 SOEs for privatization by the end of 2000. By the
beginning of 2001, 1,230 companies had already been
privatized. In 2002, only 79 companies were left for pri-
vatization.
To illustrate our government’s stance on this issue,
we reproduce excerpts from the Presidential address and
ministerial speeches:
Presidential Address
February 2001
“With public finances under intense pressure, governments
are just not able to sustain PSUs much longer. According-
ly, the Centre as well as several State Governments are
compelled to embark on a programme of disinvestment.”
“The government’s approach to PSUs has a three-
fold objective: revival of potentially viable enterprises;
closing down those PSUs that cannot be revived; and
bringing down government equity in non-strategic PSUs
to 26 per cent or lower. Interests of workers will be fully
protected through attractive VRS and other measures.
This programme has already achieved some initial suc-
cesses.”
February 2002
“Learning from our experience, especially over the last decade,
it is evident that disinvestment in public sector enterprises is
no longer a matter of choice but an imperative. The prolonged
fiscal haemorrhage from the majority of these enterprises
61
cannot be sustained any longer. The disinvestment poli-
cy and the transparent procedures adopted for disinvest-
ment have now been widely accepted and the shift in
emphasis from disinvestment of minority shares to stra-
tegic sale has yielded excellent results. The government
has taken two major initiatives to improve the safety net
for the workers of PSUs. The first enhanced VRS benefits
in those PSUs where wage revision had not taken place in
1992 or 1997. The second increased training opportuni-
ties for self-employment for workers retiring under VRS.”
Ministerial Speeches
Budget Speech of the Finance Minister for 2001-02
The Minister spoke on the use of proceeds for providing:
i) restructuring assistance to PSUs; ii) safety net to work-
ers; and iii) reduction of debt burden.
Budget Speech of the Finance Minister for 2002-03
“The change in approach from the disinvestment of small
lots of shares to strategic sales of blocks of shares to stra-
tegic investors has improved the price earning ratios
obtained. We expect to complete the disinvestment in
another six companies and the remaining hotels in HCI
and ITDC this year. Disinvestment receipts for the present
year are estimated at Rs 50 billion excluding the special
dividend from VSNL of Rs 18.87 billion. Encouraged by
these results, I am once again taking credit for a receipt of Rs
120 billion from disinvestment next year.”
Budget Speech of the Finance Minister for 2003-04
“I am confident that the pace of disinvestment will acce-
lerate in the coming year. I wish to also state that details
about the already announced Disinvestment Fund and
Asset Management Company, to hold residual shares
post-disinvestment, shall be finalized early in 2003-04…
disinvestment is not merely for mobilizing revenues for
the government, it is mainly for unlocking the produc-
tive potential of these undertakings and for reorienting
the government away from business and towards the busi-
ness of governance.”
December2002: Suo-moto Statement by the Minister of
Disinvestments Made in Both Houses of Parliament
“Review of policy and new directions: The main objective of
disinvestment is to put national resources and assets to
optimal use and in particular to unleash the productive
potential inherent in our public sector enterprises. The
policy of disinvestment specifically aims at: i) moderni-
zation and upgradation of public sector enterprises;
ii) creation of new assets; iii) generation of employment;
and iv) retirment of public debt.
62
Government would continue to ensure that disin-
vestment does not result in alienation of national assets,
which, through the process of disinvestment, remain
where they are. It will also ensure that disinvestment does
not result in private monopolies.
In order to provide complete visibility to the govern-
ment’s continued commitment of utilization of disinvest-
ment proceeds for social and infrastructure sectors, the
government would set up a Disinvestment Proceeds Fund.
This Fund will be used for financing fresh employment
opportunities and investment and for retirement of pub-
lic debt.”
Performance
As against the claims made by various ministers, the
actual performance indicators are as follows:
• While the target for the financial year 2000-2001was
Rs 100 billion, the collection was Rs 18.70 billion.
• The financial year 2001-2002 closed with a collection
of Rs 56.03 billion inclusive of VSNL’s Rs 18.87 bil-
lion and IBP’s Rs 11.537 billion. The target was Rs 120
billion.
• The target for the financial year 2002-2003 was Rs
120 billion and the collection was Rs 33.48 billion.
The yield for these three years is Rs 108.21billion
against the target of Rs 340 billion (31.8%). The total yield
for the period 1991-92 to 2003-2004 is Rs 309.46 billion
against the target of Rs 915 billion (33.8%).
These figures indicate that there has been no accel-
eration of pace of disinvestments as claimed by the min-
isters in their speeches. The moot question is: Is fatigue
now setting in the disinvestment process or is disinvest-
ment a weapon in the scorecard of the political game plan?
What is the current status of some of the companies
which were identified for disinvestments? A few sample
scenarios are as follows:
• In case of Shipping Corporation of India, efforts are
under way to locate a foreign suitor.
• Air India and Indian Airlines will be taken off the
privatization list at least for a year.
• HPCL and BPCL disinvestments have been chal-
lenged in the High Court.
• Maruti’s disinvestment of residual shares is now un-
der process.
What has Gone Wrong?
Wrong?
Some differences are bound to arise between the percep-
tion of the government regarding the level of success of
DISINVESTMENTS IN INDIA: NEEDED CHANGE IN MINDSET
the disinvestment programme and that of the lay public.
However, when the difference is considerable, it reflects
on the government’s inept handling of the process. It is
vital for the government to stem the perceived ‘fiscal
haemorrhage’ and not allow depletion of its coffers fur-
ther. Setting the wrong right earlier than later is centric
to the change process.
DO WE NEED FOREIGN INVESTMENT OR
FOREIGN ADVISORS?
From time to time, consultants have been appointed for
the process of disinvestments. The report card indicates
that they have been predominantly selected from foreign
countries despite the accepted (by the Government of
India) recommendations of the Disinvestment Commis-
sion. This has been done with the hope that they would
facilitate the inflow of FDI into the country. However,
this discrimination does a lot of harm to Indian firms.
The private sector firms too go through the process of
disinvestments. They go through varied and wider restruc-
turing involving amalgamations, mergers, acquisitions,
de-mergers, spin-offs, split-ups and so on whereas the PSU
disinvestments are restricted to disinvestments with man-
agement control and strategic partnership in selected cases.
The Indian expertise has been useful in this regard.
DISINVESTMENT AGENDA:
SOME SUGGESTIONS
The following five-point agenda may be useful for poli-
cy-makers.
• Trust the homegr own expert: If we look at the do-
homegrown
mains of cutting edge expertise, the lead players
whose initiatives the advanced countries have trust-
ed are products of our own institutions. The names
of some illustrative (and not exhaustive) personali-
ties of eminence are: Vinod Dham (Pentium chip);
Vinod Khosla (co-founder Sun Microsystems); San-
jay Tejwrika (Microsoft Windows 2000) Victor Men-
zies, Rajat Gupta, and Rana Talwar (Banking and
Management Consultancy); and Raghuram Rajan
(IMF).
• Place administrative contr ol in the hands of the
control
Finance Minister : This would enable him to com-
plete the disinvestment process focusing on FDI
which could be deposited in the Disinvestments
Fund.
• Hand over companies that ar aree a burden on the gov-
ernment to the employees: This could be done on a
VIKALPA • VOLUME 28 • NO 3 • JULY - SEPTEMBER 2003
token share price of one paisa per share. They may
turn the company around or resell it for scrap or
close down the outfit.
• Do not involve a PSU/SOE in the bidding pr ocess : A
process
PSU/SOE should not be allowed to invest or control
management interest in a PSU/SOE disinvestment
candidate. This in effect is asset stripping by the GOI
and a transfer payment (one government pocket to
another pocket) from the bidder PSU to the govern-
ment treasury.
• Manage rrevivals:
evivals: Any revivals must be profession-
ally managed on a lease basis.
CONCLUDING REMARKS
To set things on the recovery path, it is necessary to reflect
seriously on the aberrations that have entered the sys-
tem. The need of the hour is introspection and searching
for remedial measures. In this context, we quote C Raja-
gopalachari (Rajaji) who had foreseen in the year 1922
what erosion of values could bring about:
Elections and their corruptions, injustice and power
and tyranny of wealth, and inefficiency of admin-
istration, will make hell of life as soon as freedom
is given to us. Men will look regretfully back to the
old regime of comparative justice and efficient,
peaceful, more or less honest administration. The
only thing gained will be that as a race we will be
saved from dishonour and insubordination. Hope
lies only in universal education by which right
conduct, fear of God and love will be developed
among the citizens from childhood. It is only if we
succeed in this that Swaraj will mean happiness.
Otherwise it will mean grinding injustices and
tyranny of wealth. What a beautiful world it would
be if everybody were just as God-fearing and real-
ized the happiness of loving others! Yet there is
more practical hope for the ultimate consumma-
tion of this ideal in India than elsewhere.
Vipin Malik, a practising Chartered Accountant, was a member
on the Boards of RBI, IFCI, UTIIAS, and SEBI (Venture Capital
Committee). He advises a number of public limited companies
and assists IFU (Denmark), Nasdaq (USA), and overseas investors.
His publications include Reports on Consolidated Accounting
and Other Quantitative Methods (RBI) and SWAPS – Interbanking
and Interfinancial Institutions apart from other articles in
professional journals.
e-mail: vmalik@spectranet.com
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