"Modernizing India's Airports"

Monday, June 7, 2004

Commentary
Modernizing India's Airports
The Indian Express


The announcement by the civil aviation ministry to invite private
players, both foreign and domestic, to modernize and restructure Delhi
and Mumbai airports, has predictably been opposed by the Left parties
and the Airports Authority Employees Union. Addressing a rally of the
AAEU, prominent Left leaders demanded in fact a complete rollback on
privatization of airports. The government must, however, under no
circumstances, buckle under pressure and give in to these demands. Any
rollback will be seen as symptomatic of the weakness and inability of
the government to push forward the reform process, which is crucial for
the growth of the economy. Neither is there any need to do so as most of
the concerns put forward by the Left parties have been addressed in the
new policy. If the civil aviation ministers statement that the policies
were made public only after the Left parties and trade unions agreed to
the proposals is indeed true, the public opposition of the Left to the
new policy is even more worrisome. The Left cannot give their consent
and then criticize those same policies that they agreed to in the first
place. This sends the wrong signals to the markets and foreign
investors, who are still trying to assess whether the new government
will be able to take reforms forward and maintain the growth momentum in
the economy. As it is, the civil aviation minister, under pressure from
the Left, has had to clarify that his ministry viewed the steps for
upgrading the airports as restructuring and modernization, not
privatization. In a sense, the cap of 49 per cent on foreign equity
participation is already a rollback from the 74 per cent foreign equity
cap advocated by the previous NDA government. The Left has argued that
the new policy violates the Common Minimum Program, which states that
profit-making public sector enterprises will not be privatized. The CMP
should, however, be seen as a statement of broad intent and the
government must retain the freedom to adopt specific policies depending
on the prevailing situation. That the country's airports are in an
abysmal state and their modernization is long overdue and necessary
cannot be disputed. Foreign technology and money can help in improving
our airports and should be welcomed regardless of the opposition of the
Left. Calling himself the minister for investment, the Union finance
minister has stated that his primary task would be to increase
investment, both foreign and domestic. A rollback now would in no way
help that task.


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