Disastrous disinvestment policy
The NDA government’s disinvestment policy offers a perfect recipe for disaster because it is lopsided and myopic. A closer look at the list of the public sector undertakings (PSUs) on the chopping block reveals flawed thinking on the part of the government whose only objective appears to be to hand over profit-making state-owned companies to the favoured corporate groups. In the process, the livelihood of millions of employees and their families has been put in jeopardy. The unbridled disinvestment policy makes no economic sense, besides being detrimental to the interests of the employees. The dismantling of the PSUs, under the guise of disinvestment policy, began during the NDA-I regime, which ended up disinvesting seven PSUs while the present dispensation has disinvested as many as 23 public sector units, disregarding the interests of the agitating employees. It is a macabre irony that Prime Minister Narendra Modi, who claims to have sold tea on a railway platform during his childhood, should be contemplating to sell the Railways itself. Similarly, it would be preposterous to privatise LIC, an iconic organisation which is the pride of India with over 40 crore policyholders and assets worth Rs 30 lakh crore. In its eagerness to mop up resources to tide over the economic crisis, the Centre should not lose sight of the long-term adverse impact of the indiscriminate selling of public assets. It must bear in mind that the market may not have the appetite for privatisation of several large PSUs in one shot.
The disinvestment plan of the Atal Bihari Vajpayee government was unpopular and was seen as one of the reasons for the defeat in 2004. While the present dispensation has claimed that the PSU reforms represent a directional shift aimed at freeing the economy from the socialist baggage of the past, there is a strong case for retaining the government control in strategic sectors. An unchecked private sector role in the economy may result in an oligarchy. In a country like India, it is important to put in place measures to prevent exploitation of monopoly power and wider social costs in the privatisation process. For the 2020-21 fiscal, the government has set a disinvestment target of Rs 2.10 lakh crore. Of this, Rs 1.20 lakh crore will come from disinvestment of public sector undertakings and another Rs 90,000 crore from stake sale in financial institutions. However, the coronavirus pandemic raises genuine concerns over such unabashed privatisation moves and highlights the need for substantial public investment and subsidies in the economy. It also warrants a re-look at the move to sell off the PSUs to raise resources. There is an urgent need for strengthening the independence and autonomy of the PSU boards.
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