Time to revitalise the
It is surprising that the government does not envisage a major role for public sector enterprises in its POST-COVID-19 strategy for development, and plans to disinvest in them, although PSES have clearly outperformed the private sector in micro efficiency.
THE INDIAN PEOPLE NEED THE PUBLIC sector. The COVID-19 period has proved this beyond doubt. The Narendra Modi government is determined to privatise the public sector1. The latest decision, announced by Finance Minister Nirmala Sitharaman on May 17, makes it clear that the government will privatise all Central public sector enterprises (CPSES) in nonstrategic sectors. While in the strategic sector there will be only up to a maximum of four PSES, the private sector also will be allowed entry into it. PSES in defence will be privatised. Participation of private investment has been allowed in space-related activities, including planetary exploratory missions. Thus, what is strategic is not clear. A policy on the public sector would be announced soon, said the Finance Minister. The danger of privatisation hangs over the head of the entire manufacturing sector and all public services.
The paradox is that the announcement of this mega privatisation drive has been made under the Atma Nirbhar Bharat Abhiyan (ABA) package which is supposed to achieve reduction in import dependence and creation of a self-reliant India. The Central government has a budget target of Rs.2.10 lakh crore from disinvestment in the current fiscal, of which Rs.1.20 lakh crore is expected to come from CPSE disinvestment2.
STRATEGIC AND NON-STRATEGIC
It is baffling that the resolve to privatise the public sector was announced as part of ABA packages and the Budget Statement of 2020-21. Strategically, PSES were to make India self-reliant, technologically as well as in product markets, and promote import substitution. Strategic sector means arms and ammunition and allied items of defence equipment, defence aircraft and warships, atomic energy (except in areas relating to the operation of nuclear power and applications of radiation and radio isotopes in agriculture, medicine and non-strategic industries) and railway transport. All other CPSES will be considered non-strategic. Some CPSES being arbitrarily classified non-strategic and others being classified strategic goes against the logic of the ABA. The entire public sector being subjected to destructive competition from foreign investors poses a major threat to the country’s economic sovereignty, technological autonomy, national security and political stability.
The ABA foreign direct investment reforms are focussed on allowing 100 per cent FDI in telecom, automobiles, chemicals, textiles, airlines, plantation, mining, petroleum and natural gas, defence manufacturing, broadcasting, civil aviation, agriculture and animal husbandry, railway infrastructure, industrial parks, cash and carry wholesale, e-commerce, and pharmaceuticals; 74 per cent FDI in private sector banking; and 49 per cent FDI in insurance. They invite FDI even in retail trade.
This time privatisation will engulf a large number of technology- and talent-intensive sectors such as the Indian Railways, Air India, oil and gas companies such as Bharat Petroleum, Steel Authority of India Limited (SAIL), Shipping Corporation of India (SCI), and North Eastern Electric Power Corporation (NEEPCO). Under the hammer of privatisation are CPSES engaged in cap