Is the Rajasthan model of privatisation sustainable

She is not hailed as “Rani of Reforms” for nothing. Ever since her return to power in December 2013, Rajasthan chief minister Vasundhara Raje didn’t waste time to embark on path of privatisation. Her economic reforms go beyond a few concessions, rebate and tax holidays to make industry-friendly laws and even push for privatisation in even those government sectors hitherto forbidden to the private sector.

With the help of an advisory council full of corporate honchos and right-wing economists, including Uday Kotak, Kiran Mazumdar Shaw, Naina Lal Kidwai, Anand Mahindra, Mohandas Pai, Manish Sabharwal and Harshvardhan Neotia, Niti Aayog vice-chairman Arvind Pangariya and Bibek Debroy — all those who espouse the cause of the private sector —

Ms Raje has broken the monopoly of the government sector in transportation, power distribution, public distribution schemes (PDS), health and education.

The speed and zeal with which she has executed her plans took everyone by surprise — detractors and admirers alike. In the first budget presented just after winning the Assembly polls, she had announced that 20,000 km state highways would be developed under public-private partnership (PPP) mode, all nationalised routes were de-nationalised, enabling private bus operators to ply buses on them.

In addition, they were also allowed to operate from government bus stands. PDS shops were converted into privately-run Annapurna Bhandar in association with the Future Group. They will sell FMCG products like shampoo, talcum powder, hair oil and ketchup, besides the usual fair price shop products and the stock unit management will be done directly by the Future Group.

This is more than what the private sector had bargained for — they were happy with suitable changes in labour laws and land acquisition. The pro-liberalisation lobby of industrialists, economists and media commentators can’t stop singing paeans to Ms Raje’s “Rajasthan Model” of development and wants it to replace the erstwhile “Gujarat Model” when Prime Minister Narendra Modi was chief minister of that state.

Why

Simply because her development model does not restrict private players to merely building roads and bridges, but allows them to take control of the services and social sectors.

As Ms Raje completes her half-term, Kolkata-based CESC has acquired the rights for power distribution in Kota and Bharatpur. Obviously, more cities would follow suit. Four thermal power plants and RTDC hotels are up for grabs, primary health centres (PHCs) have been given to private companies and medical colleges, “Policy for Public Private Partnership (PPP) in School Education 2015” is ready allowing private parties, including corporates and societies to adopt schools on a firstcome-first-served basis. The sanitation system in major cities is handed over to private contractors. The list is endless.

The buzz about Ms Raje’s business-friendly initiatives reverberated across seven seas. Last year, the top management of a foreign institutional investor (FII) came to Jaipur to understand why everybody was so excited about “reforms” in Rajasthan when nothing seemed to be moving at the Centre despite a business-friendly Prime Minister.

In doing so, Ms Raje has ignored opposition within the Sangh Parivar, including BJP legislators and RSS-affiliated Bhartiya Mazdoor Sangh (BMS), which called her government corrupt for handing over bus services and electricity distribution to private players.

The acting president of BMS Rajasthan, Raj Behari Sharma, alleged that there was a nexus between the government and businessmen to loot public property. The manner of its functioning indicates that the government does not care for public welfare or property.

When she has ignored calls of her own, there is no chance of yielding to others even if it includes a noted economist like

Prof. V.S. Vyas who has served as director of IIM Ahmedabad and adviser in the World Bank.

“It is being done in a chaotic way. Besides, the problem with privatisation is that once the government hands over operation to private companies, it thinks that its duty is over. The government can’t abdicate its responsibility towards health and education of the people”, he added.

“We need working capital. Financially we don’t have a choice (but to go for PPP),” the CM says. But that is only partially true. The fact is that Ms Raje’s perception of government employees has changed from the time of her first tenure credited to their overwhelming support. They are more of a liability now than an asset.

“Only those who don’t want to work actually opt for government jobs,” she said in a satirical tone while addressing students at Industrial Training Institute (ITI) in Jhalawar, last year.

What helped her push through reforms was the negative public perception of government employees who were considered corrupt, indifferent and lethargic.

However, this might change once the high costs levied by the private sector start pinching them. Already, there are murmurs of protests over toll tax on highways. “I paid `130 for one way trip as toll tax for a journey of around 70 km to Bandikui,” says R.K. Tiwari who recently travelled from Jaipur to Bandikui.

Such comments will only increase once schools fee, cost of treatment and bus fare begin to cause heart burn. Will Ms Raje ignore them