Given the economic climate prevailing globally, every developing country needs to keep up both progressively and competitively. In order to achieve this, some major reforms have to be implemented and risks have to be taken. All democratic and emergent countries are drifting towards privatisation. It refers to moving possession of institutions owned by the government to the private players of the country and like everything else, this too has its pros and cons. With government bank employees protesting, it is becoming increasingly important to understand what privatising the public means.
For any growing country, privatisation is the way forward. As for India, especially after the 2016 demonetization and COVID-19 pandemic, it has become indispensable to privatise banks as we now have experienced a lot of uncertainty. A privatised bank is not only more efficient but also more advanced than a nationalised bank. It also becomes a major source of income for the government who then can use the profits to further develop rural areas. We all have heard about cases like the Vijay Mallya Scam. It is important to point out that out of the 17 banks he freighted with, 15 were from the public sector. If we keep Nirav Modi in the loop, he too scammed a government-owned bank. Private banking is based on taking the lowest risk and has better policies related to loans and frauds than a nationalised bank, hence reducing the chances of bad loans. Private banks attract more foreign investors as there is more scope of expansion and profit for both the teams. It also creates more efficient job opportunities as the competition is increased and people are motivated to work more coherently by receiving pecuniary and non-pecuniary benefits. With lesser political interference than a public corporation, private enterprises escalate to new heights. In India, there is a need for privatisation at a rapid scale as it will help improve the quality of product, curb public spending and reduce public debt while increasing output of the entire country. Privatisation will improve the internal working environment of the banking sector.
Every major reform has its pros and cons. It may have more benefits than losses, but a country is only as strong as its citizens. While there are many perks, privatisation has its own set of follies. To start with, the concept of “welfare” will become extinct as private companies care more about low risk and maximum profit than helping the rural population. Many government schemes (Jan Dhan, Pension, etc) were successful because they were applied in public sector banks. Moreover, privatising. Big private players might exploit the common public for basic things like water or transport (mainly trains). A big concern to the protesting government employee is the change of terms and conditions. They joined that particular sector for the security of their family after they retired. Now, after putting in precious years of their life working for the pension they duly deserve, the employees are faced with the fact that even as they might be able to earn more, they are at the risk of losing their pension, or even worse, at the risk of losing their jobs! While healthy competition is almost always progressive, the employee does stand a chance of completely losing his game if he’s not as prolific as his contemporaries. If we look at this from a humane perspective, this is absolutely unfair and a legit reason to be agitating. The solution is not privatising or nationalising but hidden amidst. The government sure is doing the right thing and looking at the bigger picture, but not without a suitable solution for the employees’ problem. While privatising is a boon, doing it at the cost of the welfare of our own people will reek of misfortune.
The plausible solution to this might be that while the government privatised some financial institutions, the rule of private syndicates (pension etc) should apply to people who have been working there for over 8 years as they have put it a lot of their time with the company whereas, young people (less than an 8 year experience) should only be employed under private rules and regulations. This might delay the process of rapid growth after privatisation but risking even a single citizen’s life is not worth it. The “now” privatised banks must come into an agreement that they will not end the services of the employees, based on professional incompetence, for 18 – 24 months. This will give the employee the time and space to not only adjust with the new work culture but also prove his mettle. In order to curb the rate of unemployment, the government should set up a portal where those who have been fired can set up their profiles for worthy job prospects. In short, attempts to generate employment must be made. The whole point of going through this churning is to make every person self-reliant and capable of contributing to society and we will totally compromise on that if we overlook the banes of transition. Privatisation of Indian banks will remove irregularities and bring accountability into the system but might also become the cause of widespread economic gap, but this is not as bad as it sounds as it will only create an open market for small finance companies (ex- Muthoot). Economists truly believe that privatisation is progressive in all aspects, but it can’t be achieved with a regressive approach. It takes two to tango, and I hope that the dissenters and the government come together on a common platform, and dance to the tunes of a flourishing economy.