IAF backs ‘private’
There are several strings to the bow from which the Indian Air Force just shot a powerful arrow in favour of enhanced private participation in the domestic military aviation industry. The call from a senior serving officer and a highly reputed veteran at a conference in the Capital, however, puts the issue in a context far above the stereotyped private versus public argument; and triggers recall of Russi Modi&’s quip that there was only one “national sector” ~ the dividing line should be efficiency. By pointing out that only a fraction of the $150 billion the force would be spending over the next 15 years would go to domestic industry, a whole new element has been introduced to the “debate” on raising the FDI cap in the defence sector from the 26 per cent that has proved decidedly unattractive. The IAF is well aware that the defence minister is opposed to raising that limit, still it has not backed off from making its pitch for a revision. As a capital intensive force it just cannot afford protracted delays in the acquisition process, risk contracts being scrapped on the basis of corruption allegations. It would be correct, yet over-simplistic to suggest that its long-running feud with Hindustan Aeronautics Ltd for “non-delivery” is at the core of its projecting the case for private participation. The overall procurement policy has been tweaked repeatedly to attract private participation, but with the 26 per cent restriction the desired joint venture have simply not materialised. Defence industry requires huge investments, international majors will not “play” for chicken-feed.
Also troubling the IAF, it would appear, is AK Antony&’s offer to “reconsider” a calculated policy pronouncement that public sector enterprises would be excluded from the proposed joint venture partnership to produce 50-odd medium transports to replace the retiring HS-748 aircraft. That the call for a rethink comes from a minister whose aviation track record is dubious adds to the concerns. The initial plan for an Indian private player had been conceived to lay the foundation for a non-HAL aviation industry ~ a major, profitable, programme alone would serve as a “runway”. Suspicions abound that HAL is apprehensive of its monopoly status being eroded, hence recourse to reviving the obsolete thinking that “defence” and “private” are incompatible. The need for domestic competition cannot be overlooked: the placing of some naval orders on private shipyards has shaken the state-owned units out of their slumber. Little purpose would be served by entering into the IAF-HAL conflict: the yardstick must be the strength and serviceability of the IAF fleet, whether its budgetary allocations are effectively utilised. And if it is in the larger national interest to remain purchasers rather than producers, allow a monopoly situation to persist.
In contrast to the often somnolent gerontocracy that preceded her, the alacrity displayed by West Bengal Chief Minister Mamata Banerjee in seeking to tackle the crisis caused by the sharp rise in potato prices is commendable. But her methods are questionable. Let us consider the steps she and her administration have taken. First, she announced that potatoes would be sold across the state at Rs 13. When this did not happen, she took the agricultural marketing portfolio away from a colleague and assumed direct responsibility for dealing with the crisis. This is unexceptionable and as head of government she is entitled to decide the division of work within her Council of Ministers. Next, she visited markets in Kolkata accompanied by the Police Commissioner. When panicked traders fled the market, policemen confiscated their potato stocks. Then she announced that no potatoes would be allowed to leave the state. In the absence of a law to ban inter-state commerce in potatoes, the police began detaining trucks carrying the tuber ~ presumably to other states ~ for offences under the Motor Vehicles Act. These measures have led to an improvement in the position, and reports from north Bengal at least suggest that potatoes ~ although reportedly of indifferent quality ~ are being made available at Rs 13 a kg at fair price shops.
These events provoke two observations ~ first, that Miss Banerjee&’s political instincts are sound even if she lacks administrative foresight. Two, that absence of legal sanction is unlikely to deter her once she makes up her mind to do something; there is for instance not a mention of the law under which potatoes are being confiscated from markets. Potatoes are a staple; any step that a government or a leader takes to ensure availability at a reasonable price is bound to yield political dividend. But has the Chief Minister paused to consider the consequences of her actions? West Bengal does not produce everything it consumes. What if, for instance, the Chief Ministers of Punjab or Andhra Pradesh banned the sale of rice to West Bengal? A sagacious leader would attempt to understand why things happen and deal with the causes. Every year there is a spurt in potato prices just before a new crop is planted, because farmers ~ and not only the rapacious traders whom Miss Banerjee has targeted ~ seek higher prices for stocks from the old crop. Were the Agricultural Marketing Department to purchase sufficient stocks when prices are low and preserve them in cold storages for distribution at this time, there might not be a crisis. While this affair might blow over, it is important to reflect on the strong-arm methods used by the state and its chief minister to tackle it. The signs are ominous.