KARACHI: One man, Lalu Prasad Yadav, turned the fate of the state-owned Indian Railways around and made it into a profitable enterprise. If that can happen, the same can happen to PIA. Privatisation is no solution to the problem of public-sector companies that aren’t making profit.

This was the thrust of the arguments presented by the distinguished political economist Dr S. Akbar Zaidi in his lecture on the issue of privatisation organised by the Irtiqa Institute of Social Sciences on Saturday evening.

Dr Zaidi stated at the outset that he did not think privatisation was the solution to the economic woes of the country. He said it was a general perception that once privatisation took place, everything would be fine. He said in the age of globalisation and free trade, he did not believe in national assets. He said times had changed. He said conventional wisdom suggested that the private sector was profitable and transparent whereas the public sector would always incur losses. He said our major political parties were of the same view, and even the PPP deemed privatisation was important but because of its inefficiency could not do it.

Dr Zaidi said in America, companies such as Enron and Lehman Brothers were private firms that made profit, but due to bad management collapsed and now they no longer existed. He also gave the example of airlines such as PanAm and TWA which met with the same fate. In 2008, he said, a severe financial crisis made the British government, of the Conservatives at that, nationalise banks saying they would again be privatised if things came back to normal. American President Barack Obama bailed out such companies as General Motors, because if he had not done so, then the capitalist system would have collapsed, he said. This went to show, he said, that in times of crises the state through taxpayers money saved private companies.

Dr Zaidi said state-owned enterprises, too, could earn profit. From the Pakistani perspective, he said, the OGDCL was a good example which was a profit-making company. He said both public and private sector institutions were important for the economy and it was up to the government to make sure they functioned properly. He said whether the public used the railways as a mode of transportation or not, it was the government’s responsibility to ensure its smooth working.

Pointing out the problems in that regard, Dr Zaidi said government institutions often became employment bureaus — whichever party came to power, it would employ its workers in government institutions. He said according to one estimate, 22,000 people worked in Pakistan Steel Mills, while economists believed that 6,000 people were required to run a steel mill. In such a situation, he said, it became difficult to fire unproductive employees.

Dr Zaidi said one of the solutions was to restructure and improve companies that were in loss rather than privatising them. He said interested buyers of state-owned institutions said that they would only buy them if they made profit. He asked what was the need for selling them if they were already making profit. He argued that there was a time when Indian Railways (which was considered the biggest state service institution in India) fared poorly, but one man, Lalu Prasad Yadav, turned things around and made it into a profitable enterprise. He said if Indian Railways could improve, so could PIA. He said there were hundreds of thousands of people who worked for Indian Railways, and PIA had 20,000 employees. He re-emphasised the point that we needed to restructure and better the working of our public sector enterprises and not privatise them. Another solution that he presented in that context was that the state did not tax the rich (Zardari, Nawaz Sharif, Ishaq Dar etc) and less than one per cent of the population paid taxes; if the rich started paying taxes, things could improve. He said while talking of privatisation, the military-owned enterprises were ignored.

Dr Zaidi said the job of a government was to provide good services. Therefore, restructuring those companies was required which were not faring well.

After the lecture the floor was opened for a question-answer session.

Published in Dawn, April 17th, 2016