NATIONALIZATION IN INDIA
The chapter of nationalization in the Indian economic development started immediately after independence. Iron and Steel industry was almost nationalized. Oil industry was nationalized.-Railways and Ordinance factories were already under State control. Heavy tools and heavy chemicals industries were started in public sector. All power projects were nationalized. Water supply for agriculture through canals and tubewells came to the nationalized sector. The distribution of food grains, kerosene and sugar was already with the government. Seeds and some other agricultural inputs like fertilizers were added to it. Sixteen years’ rule of Indira Gandhi saw the nationalization of Banks, Life insurance and General insurance. A very large number of sick textile mills were taken up by Textile Corporation of India.
The important point is that during Indira regime all the financial resources of the country. All the basic industries, all the agricultural inputs, major part of the means of transport and communication came to the public sector. The government became a huge octopus spreading its tentacles over all the national and natural resources. It had a grave adverse effect on the economic and moral life of the people, rather, the whole country. No government has given these entire back to private sector to relax itself.
The most serious effect of nationalization has been the fall in production and deterioration in the quality of products. All the personnel of the nationalized sector became government servants. None can turn them out, Shirking their duties has become a rule. The huge nationalized industries gave rise to huge trade unions which can bring pressure on the government.
The national sector has more than double the staff actually needed. Thus expenses are more than the production. Most of the public sector groups are running in heavy losses.
The people working in nationalized sector do not lose anything. But they have no morals. They are in the organized sector. Their demands are accepted. But they are hardly five per cent of the total number of people in the employment market. The remaining 95 per cent are in unorganized sector. They work on very small salaries. They cannot bring pressure on anyone as they have no powerful trade unions as (for example) the bank employees have. In ordinary jobs the public sector employees get near about five times more salary than what the people in unorganized sector get. The increase in salaries creates inflation which results in price rise.
Nationalization is controlled by the bureaucracy. The corruption that was limited to government offices has spread throughout the public sector rather throughout the nation. Bribe and corruption have become the culture of modern India. The leaders have been supporting socialism and discarding capitalism. The reason given is that in capitalism wealth is concentrated in a few hands. These few exploit the have nots. In nationalization wealth is concentrated in one entity – the government. What has it resulted in has been seen by the world in East European countries. There the wealth was concentrated in the Head of the State. The myth of nationalization has been exploded in these countries? It is rather a good omen for the nation that the government started paying attention to this white elephant. A white paper was prepared on six sick nationalized industries. It shows that lack of modern technology and over staffing are the two most important causes of heavy losses in the public sector. It is a good start. Let us hope it leads to denationalization as has happened in East European countries and the countries of former USSR where nationalization has been replaced by free market economy.