Themes > Current Issues
30.07.2000
Jayati Ghosh
All too often, when there
is talk of the functioning of public sector enterprises or utilities,
the argument that is most frequently heard is that such entities are
inefficient, not only because of the manner of their functioning,
but because they cannot even recover the payments that are due to
them. Thus, State Electricity Boards are in major financial messes
because of the large amount of theft of power (euphemistically classified
under "losses in transmission and distribution") besides
the non-payment of dues by users. Rural banks suffer from high rates
of default which are effectively encouraged by political powers catering
to the interests of large farmers. And so on.
While this argument is not without merit, the trouble is that most often the full reasons and implications of this are not spelt out. Thus, whenever, bad loans in the banking system are talked about, it is the agriculturalists who are mentioned as the culprits, even though the total amount of non-repayment to the organised financial system by farmers pales into insignificance when compared with the huge amounts merrily left unpaid by some of the largest business groups and richest individuals in the land.
Similarly, it is not uncommon to hear middle class urban citizens complain about the electricity "stolen" by those living in slums and very poor and "non-formal" urban clusters. But it is widely accepted by those actually involved in the power utilities, that in metropolitan areas such as Greater Delhi, the greatest proportion of power theft occurs in the richest neighbourhoods and by the powerful elite.
It is this mindset which also dominates whatever official action is actually taken to recover loans or payments due. That is, typically the pressure is put on the smallest and weakest borrowers, whose total dues account for a minuscule fraction of all the outstanding amounts. And meanwhile, the rich and powerful, whose non-payment is far more serious for the viability of the system, not only escape untouched, but also join in the general condemnation of the declared defaulters and use this as a further argument to push for privatisation.
All this becomes depressingly clear in the unfolding situation in the Chhattisgarh region, where in the past few months, a drive for rural loan and dues recovery has lad to large-scale harassment of small peasants and marginal farmers. Not only have electricity charges been significantly raised as a prelude to the commercialisation and possible privatisation of the state electricity provider, but there has been a forceful attempt to make agriculturalists pay the new dues and all back payments. At the same time, debt servicing of loans to rural banks and credit co-operatives has also sought to be enforced all at once.
This has been associated with all manner of threats and aggression by the authorities towards the peasant groups in question. Forcible recovery of dues has been associated not only with threats of attaching the small properties possessed by the peasants, but in some cases with physical violence and torture as well. In one case, all the residents of the village were forcibly taken to the police thana and threatened, and some were also beaten up.
While many would oppose the use of force, it could still be argued that the financial viability of these systems does depend upon repayment, and so it is not unreasonable for public institutions to demand recovery of dues. But this is where the politics of the entire operation becomes so evident, for the much larger dues which remain unpaid by large industrialists in the Chhattisgarh region not only are being ignored, but are even in some cases forgiven.
This was clearly brought out during the course of a demonstration by members of the Chhattisgarhi Mukti Morcha and their supporters in the Capital in late July. Among the many important demands that were raised, was the crucial one that the application of the laws of the land should be directed to the rich and powerful interests as much as to ordinary citizens. This is especially necessary in the cases of recovery of loan repayment and power dues, because the total amount owed by all the small peasants and workers of the region would be only a small fraction of the individual dues of some important industrialists.
According to CMM sources, the outstanding dues of just a few important industrialists and companies amount to more than Rs. 500 crore, which is many hundreds of times the total amount that is owed by all the agriculturalists of the region put together. Thus, in terms of bad loans, the following payments are still said to be pending : more than Rs. 37 crore from Hari Khetawat of Bhilai Wires Ltd.; over Rs. 65 crore from Nemchand Shri Shrimal, owner of K. N. Oil Mill in Mahasmand; over Rs. 140 crore owed by Kailashpati Kedia of Kedia Castle Dellon Co., which has apparently "vanished" from the balance sheets. There are said to be more than Rs. 200 crore in terms of income tax arrears owed to the government by B. R. Jain and Surendra Jain of Bhilai Engineering Corporation.
An even more striking case is evident in the case of electricity dues. The Ambuja Cement Factory of Baloda Bazaar is said to owe more than Rs. 34 crore to the State Electricity Board. Of this, it was claimed that Rs. 17 crore has been "forgiven" by the state government of Madhya Pradesh. It this is true, it is certainly worth delving into the reasons why this company has been singled out for this favour, which at one stroke has lost the state government many times what it can hope to retrieve through forcibly extracting loan repayment from poor farmers.
Of course, the problem is not specific or confined to Madhya Pradesh - it reflects a much larger tendency evident all over India and at the Central level as well, of blatantly favouring certain rich and powerful elite groups and allowing them to milk the public exchequer through non-payment of dues to public institutions. The irony is that it is these same privileged groups, who are major beneficiaries of the public system at the cost of ordinary citizens, who then lead the attack against not only the smaller beneficiaries but against the public system as a whole.
The solution to this does not lie in privatisation, but in the greater accountability of the public system to ordinary citizens, so that the powerful few with access to decision makers at the top in government, can stop swindling the rest of us.
While this argument is not without merit, the trouble is that most often the full reasons and implications of this are not spelt out. Thus, whenever, bad loans in the banking system are talked about, it is the agriculturalists who are mentioned as the culprits, even though the total amount of non-repayment to the organised financial system by farmers pales into insignificance when compared with the huge amounts merrily left unpaid by some of the largest business groups and richest individuals in the land.
Similarly, it is not uncommon to hear middle class urban citizens complain about the electricity "stolen" by those living in slums and very poor and "non-formal" urban clusters. But it is widely accepted by those actually involved in the power utilities, that in metropolitan areas such as Greater Delhi, the greatest proportion of power theft occurs in the richest neighbourhoods and by the powerful elite.
It is this mindset which also dominates whatever official action is actually taken to recover loans or payments due. That is, typically the pressure is put on the smallest and weakest borrowers, whose total dues account for a minuscule fraction of all the outstanding amounts. And meanwhile, the rich and powerful, whose non-payment is far more serious for the viability of the system, not only escape untouched, but also join in the general condemnation of the declared defaulters and use this as a further argument to push for privatisation.
All this becomes depressingly clear in the unfolding situation in the Chhattisgarh region, where in the past few months, a drive for rural loan and dues recovery has lad to large-scale harassment of small peasants and marginal farmers. Not only have electricity charges been significantly raised as a prelude to the commercialisation and possible privatisation of the state electricity provider, but there has been a forceful attempt to make agriculturalists pay the new dues and all back payments. At the same time, debt servicing of loans to rural banks and credit co-operatives has also sought to be enforced all at once.
This has been associated with all manner of threats and aggression by the authorities towards the peasant groups in question. Forcible recovery of dues has been associated not only with threats of attaching the small properties possessed by the peasants, but in some cases with physical violence and torture as well. In one case, all the residents of the village were forcibly taken to the police thana and threatened, and some were also beaten up.
While many would oppose the use of force, it could still be argued that the financial viability of these systems does depend upon repayment, and so it is not unreasonable for public institutions to demand recovery of dues. But this is where the politics of the entire operation becomes so evident, for the much larger dues which remain unpaid by large industrialists in the Chhattisgarh region not only are being ignored, but are even in some cases forgiven.
This was clearly brought out during the course of a demonstration by members of the Chhattisgarhi Mukti Morcha and their supporters in the Capital in late July. Among the many important demands that were raised, was the crucial one that the application of the laws of the land should be directed to the rich and powerful interests as much as to ordinary citizens. This is especially necessary in the cases of recovery of loan repayment and power dues, because the total amount owed by all the small peasants and workers of the region would be only a small fraction of the individual dues of some important industrialists.
According to CMM sources, the outstanding dues of just a few important industrialists and companies amount to more than Rs. 500 crore, which is many hundreds of times the total amount that is owed by all the agriculturalists of the region put together. Thus, in terms of bad loans, the following payments are still said to be pending : more than Rs. 37 crore from Hari Khetawat of Bhilai Wires Ltd.; over Rs. 65 crore from Nemchand Shri Shrimal, owner of K. N. Oil Mill in Mahasmand; over Rs. 140 crore owed by Kailashpati Kedia of Kedia Castle Dellon Co., which has apparently "vanished" from the balance sheets. There are said to be more than Rs. 200 crore in terms of income tax arrears owed to the government by B. R. Jain and Surendra Jain of Bhilai Engineering Corporation.
An even more striking case is evident in the case of electricity dues. The Ambuja Cement Factory of Baloda Bazaar is said to owe more than Rs. 34 crore to the State Electricity Board. Of this, it was claimed that Rs. 17 crore has been "forgiven" by the state government of Madhya Pradesh. It this is true, it is certainly worth delving into the reasons why this company has been singled out for this favour, which at one stroke has lost the state government many times what it can hope to retrieve through forcibly extracting loan repayment from poor farmers.
Of course, the problem is not specific or confined to Madhya Pradesh - it reflects a much larger tendency evident all over India and at the Central level as well, of blatantly favouring certain rich and powerful elite groups and allowing them to milk the public exchequer through non-payment of dues to public institutions. The irony is that it is these same privileged groups, who are major beneficiaries of the public system at the cost of ordinary citizens, who then lead the attack against not only the smaller beneficiaries but against the public system as a whole.
The solution to this does not lie in privatisation, but in the greater accountability of the public system to ordinary citizens, so that the powerful few with access to decision makers at the top in government, can stop swindling the rest of us.
© MACROSCAN 2000