May 8, 1965 THE ECONOMIC WEEKLY

pointed in February 1955); Nag- 1960. Government of India, Mini­ ture II, page 34. pur. Hyderabad and Coimbatore stry of Labour and Employment. 14 Sub-section XI, of Section 28 says; (appointed in December 1955); r- Employees' State Insurance (Gen­ The E S I fund may be expended Calcutta and Howrah, Assam, eral) Regulations notification No for "defraying expenditure within Madras, Madurai and Bangalore R S 5/48, New Delhi, October 17 the limits prescribed, on measures (appointed in July 1959). All issued 1950. for the improvement of the health by the Director General, Emplo­ 13 Questionnaire on the Employees and welfare of insured persons and yees' State Insurance Corporation, State Insurance Scheme. Govern­ for the rehabilitation of and re­ New Delhi. ment of India Ministry of Labour employment of insured persons 11 "Report on Employees State In­ and Employment. ESI Scheme who have been disabled or injure- surance Scheme" by A L Mudaliar Review committee 1964. Annex- ed".

FROM THE LONDON END Renationalisation of Steel

THE publication of the Steel Nation- of the relevant holding companies will share of the industry, producing 90 per alisation White Paper (which will be vested in a new National Steel Cor­ cent of British steel. They own or con­ be fiercely debated in Parliament) is a poration. Remembering the speed with trol all the 22 integrated iron and steel clear indication that despite its slender which the Tories denationalised steel works in the United Kingdom, and 42 majority of four, the Labour Govern­ when they were returned to power, the other iron and steel works; they con­ ment has the courage and determination present Bill proposes a public steel cor­ trol about 60 per cent of known reser­ to push ahead with one of the most poration which would have its own ves of iron ore in the U K and they controversial items in the Labour mani­ single marketing organisation and pow­ employ about. 70 per cent of the total festo. Ever since his election, ers equivalent to those of the Electri­ manpower of the iron and steel indus­ Wilson has held that the Government city Board, which in effect, would mike try. The private sector will consist of had been a mandate to govern which it very difficult to unscramble the steel about 210 companies with an annual they proposed to exercise. According­ firms and return them to private owner­ output valued at about £200 million, ly, with great political courage, no im­ ship. Acordingly, no loopholes or am­ employing nearly 100,000 people. The portant issue has been baulked despite biguities are being left in this field. The private sector will still have an import­ the fact that it might have been elec- National Steel Corporation will have ant role to play, particularly in specia­ torally less dangerous to compromise on considerably wider and more unitary lised finishing operations on the border­ controversial issues. The determination powers than those of the Iron and Steel line between steel and engineering in­ to proceed with the Bill inspite of the Corporation set up by Strauss in dustries. In introducing the White hesitations within the Labour Party 1950. At that time the commercial and Paper at a press conference, the Minis­ where two members — Woodrow managerial functions of the separate ter Lee said: "We want to see a Wyatt and Desmond Donnelly may steel companies were left to men who viable and thrusting private sector" register their discontent by either voting were relying on the fact that they would There is no doubt that in taking over against the Government's Steel White be denationalised once the Tories took so large and important an industry as Paper or abstaining in the debate and power; the Iron and Steel Corporation's steel, the Labour Party has now achiev­ thereby reducing the already slender main function was to act as a holding ed control over the "commanding majority, are certainly creditable. In­ company. The National Steel Corpora­ heights*' of the economy, and the fact deed, they give evidence of what Bri­ tion, on the other hand, while per­ that the National Steel Corporation, tain has been most in need of, particu­ mitting the individual companies in the through taking over, for example, Dor- larly during the last years of the Con­ first phase to retain their names and se­ man Long, will engage itself in import­ servative regime—a firm Government. parate identities, will see to it that these ant engineering interests, makes this In contrast with the 1949 Steel will gradually be merged in the process even more significant, particularly, as Nationalisation Act, where tae take of rationalisation which will make any under the Bill it will be free to diver­ over was to cover a large range future unscreambling very difficult in­ sify its activities outside the field of of firms, the present White Paper pro­ deed. steel with the consent of the Govern­ poses to restrict itself to the main ment. firms in the industry. In 1949 all com­ panies with production over a given Control of "Commanding Heights" The Government's case for nationali­ tonnage of pig iron, ingot steel, or hot The 14 companies that are to be sation rests on the basic argument that rolled steel, were nationalised, together taken over—Colvilles Ltd., Consett: Iron the British steel industry is split into with their subsidiaries, regardless of ac­ Co Ltd., Dorman, Long and Co Ltd., too many units to be efficient. Existing tivity. Thus, the Act transferred near­ English Steel Corporation Ltd., G K N private steel firms are just not big en­ ly 250 companies to the Iron and Steel Steel Co Ltd., John Summers and Sons ough to compete with overseas rivals. The new Government proposal will Corporation. Ltd, The Lancashire Steel Corporation create a single unit of more than 30 The present White Paper merely pro­ Limited, The Park Gate Iron and Steel million tons capacity a year—compar­ poses to take over 14 large companies, Co Ltd, South Durham Steel and Iron able in size to the mammoth concerns i e those that produced more than Co Ltd., Steel Company of Wales Ltd., in the Continent and the U S. 475,000 tons of crude steel in the Stewarts and Lloyds Ltd., United Steel twelve months from July 1963 to June Companies Ltd., and Richard Thomas Further support is given to the case 1964. The securities of these compa­ and Baldwins Ltd., which is already for nationalisation as a considerable nies, or in some instances the securities nationalised, account for the lion's degree of public control and finance

790 THE ECONOMIC WEEKLY May 8, 1965

already exists, and it would, therefore, holders is very fair. By choosing a schools at £500,000 each". be only sensible to go all the way and long period of market prices as the Some critics claim that Wilson has take the industry into1 public owner­ basis of valuation—either the 61 months pushed ahead with the Steel Bill in ship. This would allow a more positive from October 1959 to October 1964 order to placate the Left Wing elements rationalisation policy to be carried out; which reflects all degrees of political in his Party who are incensed at the obsolescent units could be cut out and and trading conditions, or the period Government's attitude towards the fight­ the most modern computer techniques from May to October 1964 whichever ing in Vietnam. Many anti-nationalisa- for plant management and process con­ is the higher, the Government has tion critics hope and believe that by trol could be introduced. Other argu­ been extremely generous. pushing through steel nationalisation, ments include the inadequacy of. the Mr Wilson will be in a position to for­ powers exercised by the Iron and Steel get about Clause 4 completely and that Board, the difficulties in financing ex­ Fierce Battle Ahead no more nationalisation will appear on pansion projects, and the absence of The steel White Papsr will be fierce­ the Party's programme. price competition. ly opposed in Parliament both by the Bitter battles lie ahead for Parliament One of the aspects of the White Conservatives and by the Liberals. The and the Tories believe that with the Paper which has caused the greatest main arguments which are being used steel White Paper and the Finance Bill surprise is the generous compensation are that in Britain's present position, they can really begin to act as an terms that have been offered. The plan nationalisation is completely irrelevant. effective Opposition. No holds will be will cost a total of £660 million—£550 No proof has been provided, according barred to try and defeat the Govern­ million worth of Government stock to to Mr Macleod, that nationalisation is ment. As for the Steel Bill itself, the be exchanged for the holdings of share­ more efficient than private enterprise. changes contemplated cannot take effect holders plus £110 million compensation The Liberal Party spokesman on steel until about mid 1966 at the earliest for stock which has no market price. said: "This is an old fashioned take­ since vesting date cannot be until 36 The Government has thus wrested the over bid giving the blankest of blank weeks after royal assent. The Tories initiative from the Opposition who can­ cheques to the new National Steel Cor­ are gambling on the hope that even not now assert that the industry is poration and compensation that will if there is no election this year, there being expropriated by ruthless social­ cost more than £600 million which is is a strong chance that a General Elec­ ists. Everyone has admitted that the the equivalent in capital provision of tion will be held before all the stages basis chosen for compensating share- 200,000 new houses or 1,200 new of steel nationalisation are complete.

AROUND BOMBAY MARKETS Political Uncertainty Tells Wednesday, Morning IT was an altogether unexciting relating to the dividend tax and the of 106 large and medium-sized units, week for the stock market. The capital gains tax on bonus shares have industrial profits showed a substantial turnover was almost at its lowest and been frustrated. T T K's promise to , improvement in 1964-65 over the pre­ even the popular' speculative counters simplify the corporate tax structure in vious year's level. The increase in pro­ drifted idly in a narrow range. Though the next Budget has failed to impress. fits was more than the increase in the market managed to keep a little If the recent massive support by the owned funds and total employed funds over the previous week's low registered Life insurance Corporation and the indicating improved profitability. Divi­ on April 26, the general tone continued almost uninterrupted flow of encourag­ dend rates also showed some improve­ to be subdued. The corporate news was ing corporate news have failed to im­ ment though they were not commen­ excellent but it brought little cheer part any strength to the stock market, surate with the rise in profits. The to the market, oppressed all the time it is mainly because the market is very pre-tax profits of 106 companies re­ by political uncertainties. And tax con­ much worried over the deteriorating corded an increase of about 19 per cent cessions announced by Finance Minis­ political situation as a result of the from Rs 50.8 crores to Rs 60.4 crores. ter Krishnamachari actually caused mounting tension on the borders. In­ As tax provision absorbed a somewhat some disappointment. The extension of vestors' confidence which had been at lower proportion of pre-tax profits in the higher development rebate at 25 art extremely low ebb since long has 1964-65. the net profits increased sub- per cent to 21 more industries, the been further undermined by the dis­ stantially from Rs 23.3 crores to Rs five-year exemption from wealth tax turbing political developments, Pros­ 29,7 crores. Distribution by way of on investments in equities of new com­ pects of a recovery in equity prices equity dividends by these companies panies with retrospective effect from which had never appeared to be pro­ amounted to Rs 17.6 crores against March 31, 1964, the increase in (he mising in view of the upward revision Rs 15.9 crores in 1963-64 and retained rate of deduction against life insurance of the interest rate structure have re profits rose sharply from Rs 6.6 crores from 50 to 60 per cent on the first ceded further on account of the ad­ to Rs 11.2 crores Rs 5,000 paid in premiums annually, verse political situation. the extension of tax rebate on profits In an otherwise extremely uncertain to more industries—all these conces­ situation, investors could, however, OILSEEDS sions, welcome as they were, had no draw some comfort from the improved significant impact on the state of the performance of the corporate sector. Firm Tendency capital market. Hopes that the Finance According to the Economic Times ILSEED prices did not strike any Minister might modify the provisions study based on the published accounts O new highs last week. But this 791