The Department of Investment and Public Asset Management under the Ministry of Finance has released a new memorandum outlining a ‘New Public Sector Enterprise (PSE) Policy under the Atmanirbhar Bharat’.
The memorandum, dated February 4 plainly lays out the plan of the government to privatize or disinvest from key public assets and enterprises, and sell them at such a rate so as to be able to raise at least 1.75 Lakh Crore Rupees in the year 2021-22 itself. This was stated in the Budget 2021 too.
The memorandum divides all of the Public Sector Enterprises into two parts: Strategic Sector and Non-Strategic Sector. It says that all ‘those in the Non-Strategic Sector will be considered for privatization, wherever feasible, or otherwise they will be considered for closure’. The government however does not stop there, and also says that it wants ‘bare minimum presence’ in strategic sectors. It says that ‘the remaining will considered for privatization, merger, subsidarization or closure’. The sectors which are considered Strategic are Atomic Energy, Space & Defense, Transport & Telecommunication, Power, Petroleum & Coal, and Banking & Insurance.
This memorandum is part of a larger policy of the Narendra Modi Government, which seeks to bring ‘structural reforms’ in the economy by selling of public assets to a few corporates. The depth of the changes that they are seeking, to which this memorandum is a step ahead, needs to be understood.
Modi and Dismantling of Public Sector
“The Government is strictly following the dictum of the World Bank and the International Monetary Fund, which says that the government has no business in business,” said Abhimanyu P, President of the BSNL Employees Union to Gauri Lankesh News while speaking about this development. “The ultimate goal of the government is to dismantle the entire public sector. This difference between Strategic and Non-Strategic is merely lip service which will not have any meaning ultimately.” Abhimanyu says that the core belief of Modi can be seen through his words, when he famously told as Gujarat CM in an interview to a private channel that the “Public Sector of the country had taken birth only to die”.
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When asked about the future of BSNL and how it has faced systematic damage and discrimination regarding 4G and other issues by the Modi Government since the coming of Reliance Jio, the Union President asserted that “one of the aims of this dispensation is to handover BSNL with all its vast infrastructure to Mukesh Ambani. The length of BSNL’s optic fibre network is 7.5 lakh route kms, greater than the sum of all the optic fibre network of all the private companies, including Jio and Airtel. We have seventy thousand towers. This new policy is a way towards the transfer of these assets.”
PSEs, Profitable or Not?
For Thomas Franco, General Secretary of All India Bank Officers’ Confederation (AIBOC), who also talked to Gauri Lankesh News regarding this, the rationale that the PSEs are loss-making does not even hold facts, and is rooted in the fantasy of the corporates. “The finance secretary has said that they have decided to sell around 151 PSEs, but most of these are making profits. On record there are only 19 enterprises which are loss-making, and the loss is very minimum, and in that too the biggest ones have been deliberately killed. The net profit of all the PSEs last year together was 1.83 Lakh Crores, which is more than their disinvestment target of this year, 1.75 Lakh Crore. This only shows that the reason for privatization is not shortage of money for the government, for which they could have encouraged the public sector more.”
The Budget 2021 has also planned to privatize seven ports, which is a concern regarding our national security too. But Thomas Franco also points to another kind of national security – the economic security of the people. “Once you are privatizing the public sector banks which have eighty crore customers and Life Insurance Corporation which has forty crore customers, wouldn’t people’s deposits be at risk? LIC is the only company which provides 95% of its profits to policy holders in the name of owners, only five percent they pay to the Government of India. Once it is privatized, the shareholders will of course want this money to be appropriated for them.”
“The Railways Sector is being privatized by this government in bits and pieces too. Even though they may not include it in this new policy, but they been doing it all along. They announced the New Railway Plan, where they have clearly stated that initially 151 trains will be privatized. Railway will be giving its track, but private operators will be running. The price will be decided by the private operator, and they have also put a condition that only an hour before or after can the other trains run. This is clearly a way to get the private fellow more profits. They are planning to privatize Container Corporation of India, which has been profitable and is part of Railways. Already many railways stations have been given to private contractors. They are planning to privatize freight trains as well, which is very profitable and subsidizes second class tickets. These subsidies will not remain if it is privatised”, he said.
State Bank of India – Bank of Reliance in Future?
There have been many speculations regarding the banks which would be privatised, and Thomas Franco believes that there are three concrete reasons to as to why it can be State Bank of India (SBI), and that the buyer could be Mukesh Ambani’s Reliance. One needs to only look at the present and past connections between the two to understand this.
“First, The SBI already has a partnership with Reliance through Jio Payments App, in which it owns 30% stake. Second, Reliance already has an Asset Reconstruction Company to which SBI is selling its bad loans. ARCs are basically institutions which help banks write off loans from its own shelf, which ARC then focuses on recovering. Lastly, the Ex-Chairman of SBI, Arundhati Bhattacharya, is now in the Board of Directors of Reliance. Along with these, the RBI too recommends now that the non-banking corporates be allowed to enter the banking sector. All of these, and now this new policy, point to only one direction.”
However, it is not so that people are going to be mute spectators in this. It is now in the hands of trade unions and the people to decide the response to this, and by extension the course of this country.