Nov 12, 2011

Debt-ridden Kingfisher Airlines to get a bailout package; indebted farmers are left to die.

Kingfisher Airlines chairman Vijay Mallya is in trouble. His airline awaits an emergency rescue. Kingfisher Airline suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7,057.08 crores. With banks reluctant to give more cash to Kingfisher Airlines, Vijay Mallya has turned to the government.

Civil Aviation minister Vayalar Ravi has been quick to make a public pitch to bailout the debt-ridden company. "I will meet the Prime Minister on his return to the country," he told the Indian Express. "I will also talk to the Finance Minister so that some assistance from the lead banks is granted. Closing down the flights affects the travelling public".

Ironically, in the past one month more than a hundred farmers have committed suicide in Andhra Pradesh, Vidharba and Kerala. All these farmers took the fatal route to escape the humiliation that comes along with mounting indebtedness. According to the National Crime Records Bureau 15,964 farmers committed suicide in 2010 alone. Put together, more than 250,000 farmers have taken their own lives during the past 15 years. Growing indebtedness had pushed them to the brink.

I haven't seen any urgency on the part of the successive governments or the policy planners and mainline economists to provide a bailout package to the beleaguered farmers. I don't understand why the serial death dance in the countryside does not evoke any reaction while all hell breaks loose when a big company goes bankrupt. Aren't the poor farmers human beings? Why is that they don't need even a word of sympathy whereas all aviation experts/planners and economists are making a strong pitch for bailing out a debt-ridden airline?

Well, George Orwell was dead right. All animals are equal, but some are more equal than others.

This brings me to the fundamental question. Economic reforms have been built on the need to privatise the industry. The economic justification for privatisation is that it ushers in efficiency. The underlying principle is that while efficiency has to be appreciated, the inefficient ones are left behind and need to be dumped. The rules of the game are clearly laid out. In a competitive environment, inefficient firms bow out. Agreed, than why do we want to change the rules of the game? Why do we want to bailout a bankrupt company? Why shouldn't it be allowed to die?

I see a number of experts on the TV channels making a strong plea to bailout the company. These experts of course are all beneficiary of a system that keeps inefficient industries floating with the help of public money. This is what happened when the world witnessed economic collapse in 2009. The inefficient and corrupt banks were rewarded with bailout packages, and the top executives who should have gone to the jail instead received bountiful bonuses. Market economy was made to survive with public money.

More than US $ 20 trillion of public money was pumped in to keep economic liberalisation alive. And this tells us that market reforms or market economy cannot sustain without public money. All it does, and that too very cleverly, is to hoodwink us to believe that capitalism is the sure path to economic growth. In reality, all it does is to allow for 'privatisation of profits, and socialisation of costs'. The rich become richer, and the poor are left to pick up the socio-economic as well as the environmental costs.

Aren't mainline economists therefore liars? They go on singing virtues of a failed and flawed economic model? Why don't they muster courage to accept the underlying principles of economic reforms? Well, the answer is obvious. They too are beneficiaries of the same flawed economic model.

Kingfisher Airline should be allowed to die a natural death. Unless we do so we will never be able to clean the rot in the system. We will go on supporting inefficiency with bailouts. What we need, and need desperately, is to send a strong message that inefficiency can NEVER be appreciated. Otherwise, we will continue to ensure that the big companies never collapse. The bigger the company the bigger would be the tax-payers support in the form of a bailout package.

The government cannot be allowed to run a charitable hospital for the ailing private companies. Let them strictly follow the rules of the game. Only the fittest survives, and the rest need to be dumped in the dustbin.

9 comments:

just_4_fun said...

Devinder ji,
Don't you think that the very concept of "efficiency" is flawed? I mean, what is the market economy after all - it is something that ensures that only the rich can get access to the basic amenities and hence the concentration of wealth in the hands of a few (the 1% !) only intensifies, giving rise to more inequality and the cycle continues, only not circularly but in a spiraling manner (in that the quantitative surplus and super extraction extraction only keeps on increasing thanks to a monotonic inflation). So it isn't like the poor are "inefficient" because of which they are poor. How mean this system is. We need to embrace an egalitarian (a socialist?) alternative, surely.

amit said...

the farmers organizations should come out on the streets and why just farmers everybody who is interested in an egalitarian society. this could be a nice starting point to push the govt. to put Mallya behind bars and confiscate his assets. and we should find out about the likes of Mallya who must be taking the nations for a similar ride.

Ramesh Dubey said...

आदरणीय देवेंद्र जी आपने किसानों के बजाय किंगफिशर एयरलाइन्‍स को बेलाआउट देने के प्रस्‍ताव पर जो सवाल उठाए हैं उसे मानवता की दृष्‍टि से तो ठीक कहा जा सकता है लेकिन बाजारवाद की दृष्‍टि से कदापि नहीं । दरअसल बाजारवाद के मसीहा(अमेरिका) में जब घाटे का सरकारीकरण और मुनाफे का निजीकरण जारी है तो उसकी नकल करने वाला भारत कैसे उससे अछूता रह सकता है ? फिर कंपनियों से चुनावी चंदा पाने वाले राजनेताओं को किसान कितना चंदा देते हैं कि वे उनकी आत्‍महत्‍या की परवाह करें । ऐसे में अन्‍नदाता आत्‍महत्‍या करें या खेती छोड़कर शहरों में रिक्‍शा चलाएं उनकी परवाह कोई क्‍यों करे ? आर्थिक विश्‍लेषक, चिंतक समूह जैसे राजनेताओं के आंख-कान तो पहले से ही बहुराष्‍ट्रीय कंपनियों के हाथों बिक चुके हैं । इसी का परिणाम है कि दुनिया का दूसरा सबसे बड़ा सार्वजनिक क्षेत्र का कृषि शोध केंद्र (आईसीएआर) एग्रीबिजनेस कंपनियों के आउटसोर्सिंग केंद्र के रूप में तब्‍दील हो चुका है । ऐसे में किसान आत्‍महत्‍या करें तो अपनी बला सके ।
रमेश दुबे

Rahul Paliwal said...

बहुत साधारण सी बात हैं श्रीमान, "सभी सयाने एक मत"...यहाँ कोई एक गांजा खाकर नहीं आया, पुरे कुए में ही भांग घुली हैं. लेकिन अंत करीब हैं.

$athish said...

Real reason for Kingfisher airlines crash, http://2bnamed.blogspot.com/2011/11/kingfisher-crashes-real-reason-revealed.html

Anonymous said...

This deterministic argument of natural selection has long been surpassed by human societies. We recognize that human conditions are unequal and in the name of democracy, demand a minimum of social security for the poor as well as the rich. Nationalized industries or governmental-run services exists because we believe in their mission and protect them. In the same way, farmers should be supported.

Corporations' mission is simply to exploit human and natural resources for the sole objective of producing and reproducing capital. Of course we should let a dying corporation die. But the most alive and efficient ones should ALSO die.

The principle of efficiency simply doesn't apply in any of both cases.

veerar said...

This is a False Flag like many others of MM Singh,for ushering in FDI in Indian carriers and other Sectors.

Anand Bhosle said...

YES ,But they r also ruining our BANKS ,Poor and comman mans bank , he is threat to comman man , he is using our tax payers money for parties ,lavish life style ,yatch ( one of the costliest in world) scantly clad girl calender ,and for ..., he is using our money , he is not pledging shares Of UB limited (not UB holding LTD) which has highest market capitalization 15000 crore and almost no debt which he holds most , and he is giving shares of defunct companies ( united spirits ,king fisher ) he is biggest looser ,he is also destroying AIR INDIA with help of Praful patel , Cant we do anything because we r weak common man


http://www.firstpost.com/business/the-curious-case-of-vijay-mallya-how-kingfisher-flew-high-on-taxpayer-money-218647.html/2

Anonymous said...

YES ,But they r also ruining our BANKS ,Poor and comman mans bank , he is threat to comman man , he is using our tax payers money for parties ,lavish life style ,yatch ( one of the costliest in world) scantly clad girl calender ,and for ..., he is using our money , he is not pledging shares Of UB limited (not UB holding LTD) which has highest market capitalization 15000 crore and almost no debt which he holds most , and he is giving shares of defunct companies ( united spirits ,king fisher ) he is biggest looser ,he is also destroying AIR INDIA with help of Praful patel , Cant we do anything because we r weak common man.


http://www.firstpost.com/business/the-curious-case-of-vijay-mallya-how-kingfisher-flew-high-on-taxpayer-money-218647.html/2