Language Comprehension Test - 23

We have witnessed several disasters in recent times—some natural, others man-made. The frequency of such calamities has inured us and deadened our collective sensitivity, but that does not reduce the enormity of the personal tragedy of each victim's family and community. The economic loss is only secondary to the human suffering, but is also substantial. The Government, whether State or Central, has standardised its response. This consists of reacting late, blaming others, visits by VIPs announcing a relief package including compensation for those affected, and then forgetting all about it.

There seems to be little attempt at drawing lessons from each disaster, storing the knowledge for future use, and long-term planning for possible pre-emptive action. Preparedness for disasters thus falls short of what is possible using today's technologies. Floods in many parts of India like the states of Bihar and Assam are a yearly phenomenon. Yet the government seems to be caught by surprise year after year. It is obvious that tarpaulins, vaccines and other medicines, clothes, satellite phones, large numbers of doctors and paramedical staff, etc will be needed as will boats and buses for evacuation. This is known to all those who have combated emergencies, yet the non-availability of these essential services and commodities occurs. Worse, the organisational structure and mechanisms for dealing with disasters are lethargic and ill-defined.

The National Disaster Management Agency set up a short time ago, being a Central Government agency, has its limitations relating to infringing the jurisdiction of states. It could have aggregated and disseminated experiences and knowledge, stocked many of the essential items required in an emergency or worked with agencies to ensure sufficient stocks, but hasn't. While the reaction to major disasters is dismal, the response to emergencies like accident is equally sad. Victims lie unattended since passers-by are wary of getting caught in a labyrinthine of police and legal systems. The resulting delay in treatment converts injuries into deaths. Of late, unique and free service to provide assistance in emergency cases is operational.

Emergency Management and Research institute (EMRI) is a professionally managed operation—initiated by the vision and grant from Ramalinga Raju. The service, which is a successful example of public-private partnership, is likely to become operational in a few states in the near future. Given the sad failure of conventional government organisations in handling disasters, it is time we looked at the PPP model as an alternative without the government seeking in any way to abdicate its responsibility. While the state provides the funding, private organisations will provide the drive, professionalism, competent management and output-linked efficiency of a good corporate organisation. Combining the sensitivity and purpose of an NGO with private entrepreneurial drive to handle disasters together is thus a worthwhile challenge for both corporates and the government?

The function of capital markets is to facilitate an exchange of funds among all participants, and yet in practice we find that certain participants are not on par with others. Members of society have varying degrees of market strength in terms of information they bring to a transaction, as well as of purchasing power and credit worthiness, as defined by lenders. For example, within minority communities, capital markets do not properly fulfil their functions; they do not provide access to the aggregate flow of funds in the United States. The financial system does not generate the credit or investment vehicles needed for underwriting economic development in minority areas. The problem underlying this disfunction is found in a rationing mechanism affecting both the available alternatives for investment and the amount of financial resources. This creates a distributive mechanism penalizing members of minority groups because of their socio-economic differences from others. The existing system expresses definite socially based investment preferences that result from the previous allocation of income and that influence the allocation of resources for the present and future. The system tends to increase the inequality of income distribution. And, in the United States economy, a greater inequality of income distribution leads to a greater concentration of capital in certain types of investments.

Most traditional financial market analysis studies ignore financial markets' deficiencies in allocation because of analysts' inherent preferences for the simple model of perfect competition. Conventional financial analysis pays limited attention to issues of market structure and dynamics, relative costs of information, and problems of income distribution. Market participants act as entirely independent and homogeneous individuals with perfect foresight about capital market behaviour. Also it is assumed that each individual in the community at large has the same access to the market and the same opportunity to transact and to express the preference appropriate to his or her individual interest. Moreover, it is assumed that transaction costs for various types of financial instruments (stocks, bonds, etc.) are equally known and equally divided among all community members.

The public sector is at the cross roads ever since the launch of economic reforms programme in India. The pendulum has been swinging between survival and surrender. It is the result of a confluence of several factors: a shift in global economic environment, the emergence of the market economy and myths surrounding the performance of the public sector. So virulent has been the onslaught that it is becoming axiomatic that by the very concept, the public sector is inefficient and resource waster whereas private enterprise is resource efficient.

The reform programme in India commenced with the policy of restricting the public sector supported by greater public participation. With the passage of time, the process of liberalization has shifted to privatization in a disguised form couched as strategic role. In the wake of the recent hot pursuit of the wholesale privatization programme a lively and poignant debate has emerged. It provides a golden opportunity to introspect and revisit the issue. At the very outset, it must be made clear that in the worldwide liberalized economic environment and very high stake of the state in most public sector undertakings disinvestment policy seeks to differentiate closed or bankrupt enterprises from the private sector, a fact deliberately overlooked by the champions of privatization. These undertakings need immediate attention.

They are an unnecessary drain on the public exchequer. A high priority area for the disinvestment programme ought to be these enterprises but under one or the other argument these remain unattended, may be it involves a tough task. If these cannot be sold lock, stock and barrel asset stripping is the only option. Obviously the government cannot realise good price from these assets but their disposal will help to stop the drain. If the assets are depreciated or become obsolete, then there is no point in holding on to them indefinitely and take to softer option of selling the vibrant and highly profit-making organisations to reduce the budgetary deficit. Non performers exist both in public and private sectors.

Why condemn the public sector as a whole? Better option will be closure or privatization of loss-making and nonviable units, supporting PSU's which could be turned around and made to become healthy and viable and providing autonomy to the boards of PSU's which are performing well and have potential to be globally competitive be welcomed. With public participation in the PSU's there will be a good dose of accountability in the system. What needs to be reviewed are some basic issues: the priorities allocated to the enterprises selected for disinvestment, a .comprehensive road map delineating the route, the modes and modalities, timing and its consequences. These basic issues require greater discussion and participative decision-making. In any event, the disinvestment programme in respect of the closed and non-revivable units is a must if the drain of further resources is to be prevented.

Let it be understood that PSU's are a big repository of value and it will take quite some time for privatization programme to materialise despite the desire to expedite the process. Until then if a vacuum emerges attended by uncertainty, it will do a great harm to the investments which were made with such great dedication although desired now. The government has withdrawn a budgetary support over the last decade. If some support is extended, it is largely directed to closed or losing enterprise which have no fortune.

The function of capital markets is to facilitate an exchange of funds among all participants, and yet in practice we find that certain participants are not on par with others. Members of society have varying degrees of market strength in terms of information they bring to a transaction, as well as of purchasing power and credit worthiness, as defined by lenders. For example, within minority communities, capital markets do not properly fulfil their functions; they do not provide access to the aggregate flow of funds in the United States. The financial system does not generate the credit or investment vehicles needed for underwriting economic development in minority areas. The problem underlying this disfunction is found in a rationing mechanism affecting both the available alternatives for investment and the amount of financial resources. This creates a distributive mechanism penalizing members of minority groups because of their socio-economic differences from others. The existing system expresses definite socially based investment preferences that result from the previous allocation of income and that influence the allocation of resources for the present and future. The system tends to increase the inequality of income distribution. And, in the United States economy, a greater inequality of income distribution leads to a greater concentration of capital in certain types of investments.

Most traditional financial market analysis studies ignore financial markets' deficiencies in allocation because of analysts' inherent preferences for the simple model of perfect competition. Conventional financial analysis pays limited attention to issues of market structure and dynamics, relative costs of information, and problems of income distribution. Market participants act as entirely independent and homogeneous individuals with perfect foresight about capital market behaviour. Also it is assumed that each individual in the community at large has the same access to the market and the same opportunity to transact and to express the preference appropriate to his or her individual interest. Moreover, it is assumed that transaction costs for various types of financial instruments (stocks, bonds, etc.) are equally known and equally divided among all community members.