8. Compulsion to Convert Loans into Shares Abolished

The policy of nationalisation started by the Government of India in the late 1960s was based on the sound logic of greater public benefit and had its origin in the idea of welfare state—it was criticised by the victims and the experts alike. In the early 1970s, the Government of India came with a new idea of it. The major banks of the country were now fully nationalised (14 in number by that time), which had to mobilise resources for the purpose of planned development of India. The private companies who had borrowed capital from these banks (when the banks were privately owned) now wanted their loans to be paid back. The government came with a novel provision for the companies who were unable to repay their loans (most of them were like it)—they could opt to convert their loan amounts into equity shares and hand them over to the banks. The private companies which opted this route (this was a compulsory option) ultimately became a government-owned company as the banks were owned by the Government of India—this was an indirect route to nationalise private firms. Such a compulsion which hampered the growth and development of the Indian industries was withdrawn by the government in 1991.35

The picture presented by the New Industrial Policy of 1991 was taken by many experts, the opposition in the Parliament and even the public figures as well as the business and industry of the country as a ‘rolling back’ of the state. The glorious role given to the state by the Nehruvian economy seemed completely toppled down. Any one idea the new policy challenged was an emphatic good bye to the ‘control regime’ perpetuated till now by the government. There was a coalition of interests of politicians, bureaucrats, multinationals as well as the domestic industrial and business houses whose interests were sheltered and by the control regime.36 Thus, a memorandum to the government requesting not to dismantle the control regime by the major industrial houses of India as well as arrival of the ‘Swadeshi Jagaran Manch’ were not illogical. But the governments continued with the reform programme with politically permissible pace and a time came when the same industrial houses requested the government (2002) to expedite the process of reform. Now the Indian industry and business class has been able to understand the economics of ‘openness’ and a different kind of the mixed

economy. But the process of reforms have still to go miles before its real benefits start reaching the masses and development together with reform could be made a mass movement.

This is why experts have suggested that only assuming that reforms will benefit the masses will not be enough to make it happen politically, but the governments, the administrative agencies and the economists all need to link it positively to mass welfare—it might require to create a popular climate and form the political coalitions in favour of the argument that privatisation and accordingly restructured labour laws are basically aimed at creating jobs, better job prospects, alleviating poverty, enriching education and providing healthcare to the masses.37 In the coming times, the government went from one to another generations of the reforms, setting new targets and every time trying to make reforms socio-politically possible.

Reforms with the human face was one such attempt of the United Progressive Alliance in 2003 when it formed the government at the Centre. It was believed that the ‘India Shining’ slogan of the outgoing government (i.e., the NDA) was correct, but remained localised in its effects to the urban middle class only.38 The new government seemed taking lessons from the past and tried to make India shine for the rural masses, too. Its one programme, the Bharat Nirman (a rural infrastructure focused programme), could be seen as a political attempt to make it happen.39‌

Only the coming times will tell as to what extent the government has been able to educate the masses (better say the voters who vote!) the needful logic of the reforms.