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Tue, 21 Jan 2020

Northeast Today

The Massive Sell: Privatisation of National Properties

The Massive Sell: Privatisation of National Properties
December 09
15:18 2019

Kishor Kumar Kalita

 

The Union government has recently cleared disinvestment in five Public Sector Undertakings (PSUs) in the country. This is likely to bring in around Rs 60,000 crore which accounts for nearly 60 per cent of Rs 1.05 lakh crore budgeted from the strategic stake sales in PSUs this financial year. The move will also help the government keep its fiscal deficit in check.

The progression of selling of the public sector unit in India was started as a consequence of Economic Liberalism and Infrastructure development that was initiated in the country right from 1991. Surprisingly during the period of post liberalisation,  the total expenditure of the Government of India, as reflected in the  Union Budget of India, increased from Rs. 1,13,422 crore (1991-92) to Rs. 21,46,735 Crore (2017-18). To elevate the funds partially for these expenditures and to minimize fiscal deficits in union budgets, the Indian Government started divestment in public sector undertakings. Though the Congress government has opened up the process of economic liberalisation under the direct dictation of the World Bank and the IMF, an accelerated move of selling the PSUs was not possible during that regime, primarily because of strong resistance from the left political parties and different labour unions.

However, when the BJP led NDA Government came to the power in the centre (1999-2004), major divestment steps were taken place. Even after having good profit record and future prospects, the government had made four strategic disinvestments- in Bharat Aluminium Company (BALCO) and Hindustan Zinc (both to Sterlite Industries), Indian Petrochemicals Corporation Limited (to Reliance Industries) and VSNL(to the Tata group). Criticism had been also raised against this Government for divestment of IPCL, in which Reliance industries bid very high as compared to other competitors.

Yet again in starting from 2014 to 2018 BJP led NDA government divested total Rs. 1,94,646 crore, which also includes minority and majority stake sale of most profitable Public sector undertaking companies, like ONGC-HPCL deal worth Rs. 36,915 crore. The Narendra Modi government has decided to go for strategic disinvestment of 23 Public Sector Undertakings (PSUs). The budget estimate for the move in 2019-20 has been set at Rs. 1,05,000 crore. The Finance Ministry informed Parliament on July 22 this year that in 2018-19, the proceeds from disinvestment were Rs. 84,972 crore.

Among the units that will go down the hammer includes Project Development India Ltd, Hindustan Prefab Limited (HPL), Engineering Project (India) Ltd, Bridge and Roof Co. India Ltd., Pawan Hans Ltd., Hindustan Newsprint Ltd (subsidiary), Scooters India Limited, Bharat Pumps Compressors Ltd, Hindustan Fluorocarbon Ltd. (HFL) (sub.),Central Electronics Ltd, Bharat Earth Movers Ltd. (BEML), Ferro Scrap Nigam Ltd.(sub.), Cement Corporation of India Ltd (CCI), Nagamar Steel Plant of NMDC and Alloy Steel Plant, Durgapur of SAIL.

As the government wants to withdraw itself from any manufacturing or producing industries, it is now searching for better private hands to take over these PSUs unit. According to Finance Ministry, “Strategic disinvestment has been guided by the basic economic principle that the government should not be in the business to engage itself in manufacturing/producing goods and services in sectors where competitive markets have come of age, and economic potential of such entities may be better discovered in the hands of the strategic investors due to various factors, e.g. infusion of capital, technology up-gradation and efficient management practices’.  Finance Ministry also stated that the government would also sell “whatever is saleable”, and is planning to breach the minimum 51 percent ownership level in select entities.

Since the financial year 1991-92 to 2017-18 government led by political parties sold total public assets of Rs. 3,47,439 crore. In the past recent years, Public sector undertaking units performed well as compared to other private competitors and paid huge dividends to the government. The Net Profit generated by all 257 operating Central Public Sector Enterprises ( CPSEs) during 2016-17 stood at Rs. 1,27,602 crore compared to Rs. 1,14,239 crore during 2015-16 showing growth of 11.70%, while loss of incurring CPSEs minimized to Rs. 25,045 crore in 2016-17 compared to Rs. 30,759 crore in 2015-16 showing a decrease in loss by 18.58%. But derecognising such achievement of various PSUs, the present government is determined to sell whatever is saleable in this country. Admitting Prime Minister Narendra Modi’s initiative for absolute privatisation of the whole of the National assets, a senior Finance Ministry official has revealed, “We have strong support from the prime minister. With that support, I am 100 percent sure that whatever is saleable will be sold, and whatever is not saleable also will be tried.” The official again said-“It is not so easy to shed the 70-year-old tradition. Those who are sitting on the administrative control of PSUs don’t want their control to go. But the government is absolutely committed to privatisation,”

Recently the central government has decided to sell more other PSUs which is running their business in profit. Apart from Air India, the government also wants to steadily privatise the Indian Railway. In that sense, we are witnessing such a socio-political reign where the state is patronising absolute privatisation of its national properties. Privatisation now seems to figure quite high on the Narendra Modi government’s economic agenda, as it intends to sell its entire stake in Bharat Petroleum Corporation Limited, Air India, and Shipping Corporation of India. With Rashtriya Swayamsevak Sangh (RSS) chief Mohan Bhagwat supporting, or at least not opposing, the sale, political resistance to the bold move is likely to be insignificant.

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