Stories from Wasseypur

PSUs are made inefficient when their hands are tied by their respective ministries and there is unequal competition. Wasseypur is not just in the bad lands of Bihar, but also very much there in the glittering, shining India. Will it change?

Anirudha Dutta
Updated: Oct 6, 2012 12:29:36 PM UTC

Before I start I have a confession to make – I have not yet seen the film Gangs of Wasseypur and when I do, I want to watch both parts at one go. But reading an article in India Today – The Real Gangs of Wasseypur – took me back to the summer of 1990 when as part of my then job, I visited Dhanbad a few times.

I was then working on a project to identify a supplier of copper wires. There was a small scale unit I was working with and visited them quite a few times and even got to know the proprietor reasonably well. I learnt from some local contacts that the proprietor belonged to the gang of Surya Deo Singh (sometimes spelt as Suraj Deo Singh), well-known coal mafia don. The business that was being run was legit but the raw material was not. The story that I was told went something like this – copper rods/ wires bought by Coal India Limited (CIL) were rejected by the Quality Control (QC) personnel and sold as scrap, which the gang members would buy at scrap prices. Remember the QC has rejected them on quality issues. These would be then be drawn into wires and sold back to CIL at full prices!

CIL is not unique to these kinds of thefts. Apparently political funding from PSUs used to happen the same way. A senior PSU official (after his retirement) once told me the story of how prime grade steel billets and rounds would be rejected by the QC manager and then sold as scrap to re-rollers in the region, who obviously belonged to a political party. The prime bullets would be rolled and resold into the market at prime prices. These were the days when steel market was controlled by the Government of India. The rules were all in place – a steel plant first had to utilise its capacity with prime grade material before supplying to the re-rollers. So prime grade material would be rejected and sold as scrap. Imagine the margins that the unscrupulous re-rollers were enjoying and the money that the PSU was losing.

While some of the stories are over two decades old, I have reason to believe that not much has changed. It was in Dhanbad that I saw toll roads in operation for the first time in India. And till then I had never set foot outside India. These were days when there was no Internet and I, for one, was not very well aware of things happening outside India. Globalisation was still not a part of our lexicon. This was the time when Laloo Prasad Yadav had come into power in Bihar and there was massive hope of change. He used to cycle to the CMs office from the very humble dwellings of his brother and in one stroke had removed all the road bumps. His oratory style is still the same and then he wanted the roads in Bihar to resemble Hema Malini’s cheeks!

Once when travelling from Dhanbad to another city by local bus, we stopped near a bridge just at the outskirts of Dhanbad city. This was the peak of summer and we quenched our thirst. When the bus started again, I saw there was a barrier of bamboo pole which was being manned by a few local people and they took some money from the bus driver and gave him a receipt. On asking, I was told, that these were people of Surya Deo Singh and they were charging a tax for using the bridge that Surya Deo Singh had built. That probably was India’s first toll bridge much before PPP was discovered and much before globalisation had become a buzzword.

The beauty of that bridge was that a few metres away from it stood a dilapidated bridge. I was informed by one of my co-passengers that the dilapidated bridge was the one built by the government and once again Surya Deo Singh had ensured that the government did not repair the bridge and it fell into a state of disrepair. I have no way of knowing whether this story is true or apocryphal. But that was the local legend and knowing the way things worked in Bihar and pretty much in many other parts of the country, I had no reason to believe otherwise.

Reforms, opening up and liberalisation have not changed some of these things (Read: IT raid in Jharia yields record breaking cash recovery). If you look at how mines get allocated, how competition is subverted, how MTNL and BSNL are crumbling under huge losses, how Air India has become sick, there are a lot of parallels between the toll-bridge and the government bridge that would not be used and would lie in a state of disrepair. Discretionary powers have to be taken away from ministers and the government to the extent possible and independent regulators have to be appointed wherever there is a public good and then there is no reason why PSUs will not do well and compete comfortably with the private sector.

Russi Mody, the erstwhile charismatic chieftain of Tata Steel, used to say that the difference is not between PSU and private sector, but the difference is between efficient and inefficient sectors. And PSUs are made inefficient when their hands are tied by their respective ministries and there is unequal competition. Wasseypur is not just in the bad lands of Bihar, but also very much there in the glittering, shining India. Will it change? For the sake of India and for its next generation, let’s hope it does. Otherwise like Gangs of Wasseypur, there will be bloody events in between and in the end.

PS: This blogpost comes after a long delay as I was travelling. And as I had “warned” in my first post, all stories will not be positive.

The thoughts and opinions shared here are of the author.

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