Wednesday, October 31, 2012

Kejriwal busts crony capitalism : Whom to blame finally...?

Activist turned politician Arvind Kejriwal has changed the direction of his arrows and today he hit the India's most valuable corporate house, Reliance. Kejriwal tore down into the Reliance and even went on to say that Mukhesh is the one who is remote controlling Manmohan and indirectly India. (Well many thought it was Sonia Gandhi till now). He also added BJP to the list of accusations and said both BJP and Congress are in Mukheshji's (election funding) pockets.
The details are out in the mainstream media and let me present the gist of it.
  • Enter into a contract with government for extracting natural oil and gas off Godavari Coast with long term supply at affordable costs. The contract also has various options to keep high profitability.
  • Pressurize the government to revise the cost of supplying gas because of increase in production costs
  • The government in collusion with the company accepts the price revision and Reliance reap huge profits.
The steps mentioned above is eventually same in many of the public private partnership(see bold letters).

The Mixed economy
Our economy is one of the unique system where we are not entirely socialistic nor we are entirely capitalist. We are walking somewhere in the middle.
So here we have a mixture of enterprises like the ones which are entirely under public sector, some entirely under private and many of them in the public-private domain.

Public sector
We still have many sectors which are not much exposed to private players like railways. The growth is almost average in this sector. But modernization is a big question mark. And if at all we had gone for an economy like this, I hope our pace would not have provided me infrastructure to write a blog and publish it.

Private sector
So lets go on to the other extreme end and see how this private sector works. We have all seen the result of these private players creating a bubble in American economy with a free hand and bursting it with an even more free hand.

And finally the middle way, the result can be seen in the beginning of the article. So now who has to be blamed for all these inconsistencies. We were in confusion right from the beginning when we had the option to choose between these two extremes. And finally we choose the middle path of economy. And we still are in confusion. We have to decide who will be suitable to distribute our precious natural resources. Is it the government or the private sector or the combination of both? If we are not addressing this basic question? Many scams will soon raise to heights and finally get buried in depths.

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