Management and rule reform instead of privatization: Raghuram Rajan

New Delhi: Former Reserve Bank Governor Raghuram Rajan, who has been a critic of the government, has said that the government needs to improve management rather than privatize strategic assets. Rajan was on the panel to discuss the new economy that is reshaping the world. Other speakers included Sam Pitroda, the pioneer of the telecom revolution, and Palanivel Thiagarajan, the finance minister of Tamil Nadu.

Asked about privatization, Congress spokesperson Supriya Shrinath told Thiagraj that his government understands the importance of the private sector and the co-operative sector, but that public utility products and services, roads, infrastructure must remain with the government.

Rajan agreed that there should be a clear role for all sectors. The government should not be in the business of making any watch (HMT). The objectives of the state are different and it should ensure that competition is maintained in the private sector, not a monopoly.

"If you privatize the core infrastructure sector without adequate regulation, it can also lead to a monopoly," Rajan said. The private sector can routinely exploit people.

Sam Pitroda suggested that the government should reduce its holdings in properties instead of selling them directly. Agreeing with him, Rajan said why can't we improve management. You privatize public entities through a public issue, selling its shares to the public. ICICI was similarly privatized. But in reality it is a bank made for people. Adequate competition from the private sector is also required in the banking sector. But at the same time, it is important to ensure that the public sector does not become crippled and does not enjoy privileges. Our public sector banks have become crippled. I don't see any public sector bank sitting on assets. But we can ensure that our restrictions and rules are such that the private sector cannot take advantage of them. Good governance and good rules make privatization the same thing. Rajan is currently a professor of finance at the University of Chicago Booth School of Business. Raj has been criticized by the government for not spending enough on healthcare and education and cutting back on it. Our debt has reached over 90 per cent of GDP. People are being pushed into poverty. The situation is getting worse than it is.