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View PointA mega sale of public assets

A mega sale of public assets

Published: 14th Sep 2021 1:01 am

By Samudrala VK

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In India, August has its own importance. In addition to Independence Day, the month brings a series of other festivals and jamborees with it. It is also the month where businesses lure customers with lucrative offers and huge discounts to tap the festive season.

One such offer in the last week of August caught the nerves of not just the common man but renowned economists too. Quite surprisingly, it was not from the e-commerce portals like Amazon and Flipkart. It’s the Government of India that has come up with a mega sale of assets. Unfortunately, it is beyond the capacity of a common man to avail it though the offer period extends till 2025.

The Union government, under the leadership of Narendra Modi, has unveiled the National Monetization Pipeline (NMP). In short, it is a roadmap that is designed to lease the existing brownfield projects to prospective buyers for a period of 25 years. As disinvestments and privatisation are already under way in Central Public Sector Enterprises, it seems the Union government is not satisfied with the pace with which they are being carried out.

No Gold Diggers

The Union government’s decision of monetising the nation’s public assets is neither welcome nor appreciable. The oblation of golden ducks, ie, the wealth-creating assets, will be counter-productive. Though the move is not new given the path that the successive governments since the 1990s have been adopting, the recent step is a blatant display of crony capitalism. Seemingly, the economic uncertainty caused by Covid has come as a blessing to the present government to carry out its grandiose plan of gifting the national assets to its cronies under the mask of correcting measures.

It is no rocket science to know how an asset is created. An asset doesn’t fall from the sky or heaven. It has to be built with raw materials, labour and wherewithal. In the case of assets that are made in public interest, it requires a humongous exercise of deliberations to decide what would be the best fit for the nation in the long term. These assets are made with optimal utilisation of resources. Though the tag of ownership on the assets that are created out of public finances rests with the government, the real ownership rests with the citizens of the country.

People’s Share

Every individual in a country has her direct or indirect share in the realisation of these assets. While some contribute directly to the creation of assets by taking part in the labour, others contribute their efforts by paying taxes to the government. Moreover, every individual has a sense of belonging with it. Every individual looks up to and feels proud of the public assets or enterprises. These assets cannot be seen only from the monetary lens.

The political leadership has the duty to safeguard, develop, and establish new public assets. It cannot act according to its whims and fancies. In contrast to the role of guardian of public assets, the present leadership has been acting like a salesman. It appears that the current regime is trying to whitewash its mismanagement through extravagant giveaways to private players or foreign entities under the guise of reviving the economy. Though it has been trying to wrap its wrong-doings on the economic front under the carpet, the dire state of the economic health of the nation can be noticed easily. At a time when the role of state in the economic domain has to be maximised to heal the wounds that are caused by the pandemic, the Union government is going the other way.

The BJP-led Union government, which is known for delivering jubilant slogans and eye-catchy acronyms devoid of substance, has mismanaged the country’s economy in pre-Covid, during Covid and post-Covid times for its political gains. Be it demonetisation or GST, the Union government has been habituated to making unpredictive moves making the economical scene unpredictable. On one hand, tactically it boasts itself as the flag bearer of self-reliance to complement its political agenda, and on the other, it withdraws itself from not just the key sectors but as a whole to cajole its crony friends.

No Clear Answers

Does the state lack managerial experts or bureaucrats to improve the performance of the assets in question? Does it lack the resources to improve the quality and performance of the assets? Does it lack the manpower to operate them by herself? It is no brainer to say a big no. Is there any guarantee that the leasing out programme will not replace state monopoly with private monopoly? Going by the present business scene in the country there is no need to burn the midnight oil to guess.

What will the government do with the money that it gets from leasing out the assets? Will it spend on the development of infrastructure? In fact, the government is looking forward to monetising the existing infrastructure while wanting to build new ones. Will it consider the depreciation cost of an asset due to wear and tear during the leasing out period and shift it onto the private operators? Does it guarantee that the services would not cost an arm and a leg for a common man down the line?

Can we expect transparency in revenue during the operating period by the private players? Will the government make sure that the leasing period cannot be extended even if the private players book low revenues? Has the government shed a thought on the question of demand given the scenario of underutilisation of existing infrastructure? Will the government make sure that the livelihood and other social securities of the current workforce are not compromised? Will the private players retain them down the line? These are the questions that the Union government has to answer before making any major move.

The leadership has been trying to support its argument by highlighting buzzwords like efficiency and profitability. Is it right to expect profits from an asset that is built to meet the needs of citizens? It is beyond rationality to expect profits from entities built keeping the national interest in perspective. Moreover, infrastructure projects, especially the ones like railways or roads that serve the needs of a common man cannot be seen as gold diggers.

It is preposterous to assume that private players will be keen to invest in or upgrade the assets they are bestowed with. Without any doubt, their sole motive will be making money which will compromise the quality of assets.

(The author is Director, Samudrala VK IAS Academy)

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