While the Kerala government is considering concessions to the Information Technology, Tourism and export sectors in the coming Budget (see post), the Central government is going beyond that.
The Centre is planning to bail out Satyam Computers with public money to the tune of Rs. 2000 crores. Remember that this is after providing all kinds of subsidies and tax concession to the industry. Why should be poor Indian whose per capita income is a pittance pay up if those who had annual incomes running into lakhs of rupees would lose their jobs?
Could the international reputation of our IT industry be kept by such action. After all, when we embraced globalisation and capitalism, we also accepted the market principle that the fittest survives. Then, why try to protect the unscrupulous. What the government should be doing is to restore any money siphoned off from the company. The assets created using such funds should be frozen and given back to the company.
All this happens because regulators like the Securities and Exchange Board of India fails to do their job. They did practically nothing when companies disappeared after raising money from the market through public offers. They turned a Nelson’s eye when director boards of various companies and even mutual funds took dubious decisions.
It may be recalled that within years of liberalisation, the government had to bail out the Unit 64 Scheme of Unit Trust of India because of its questionable operations in the purchase of stocks. But little had been done to prevent a repeat of such actions by mutual funds.
If the country’s companies should have international standing, the government should ensure that they are well-regulated.