HOT METAL

http://www.telegraphindia.com/1071231/jsp/opinion/story_8715625.jsp

HOT METAL

Political argument can kill an industry but can rarely make it economically viable. Unfortunately, the running of State-sector industries is mostly a political affair in India. There can be little doubt that the reopening of the Steel Authority of India’s factory in Kulti has primarily been a political decision. If Bengal’s leftists had pleaded with several governments in New Delhi for the reopening of the factory, they clearly saw it as a political cause. And the United Progressive Alliance government has now fallen in line also because of its equations with the Left. It is doubtful if the economic argument justifies the reopening of the factory, which is the oldest steel-manufacturing plant in India. Also, SAIL’s record as a competitive organization is not exactly exemplary. True, the emphasis on infrastructure has created a new demand for steel both in India and abroad. This is borne out by the fact that as many as seven new steel plants, including the largest in the country, are likely to come up in Bengal over the next few years. But all these new projects are in the private sector and depend on modern technology and efficient management much more than a public-sector unit such as SAIL does.

If the Kulti factory is not to be another drain on SAIL’s resources, it has to be run on purely commercial lines. For that to happen, the running of the unit has to be insulated from politics. This is easier said than done. It is a safe bet that the trade unions affiliated to the Communist Party of India (Marxist) and other parties would compete with one another in influencing the recruitment of workers. Outdated technology and inefficient management contributed to the closure of the Kulti factory. But a large part was also played by irresponsible trade unionism. The closed factory became something of a symbol of the malaise that still afflicts many units in the old industrial belt of Bengal. Reopening a closed factory is, at best, a gamble. Whether it will pay off depends on its managers’ abilities to make economic sense of it.