Privatisation of PSEs

THE announcement of the privatisation policy of public sector enterprises (PSEs) in the union budget has been greeted with euphoria by the corporate media and rightwing economists.  “Modi has changed”, “Extraordinarily bold” and “Real reforms at last” were some of the comments by these circles.

What evoked such cheer amongst big business and financial speculators? What was announced in the budget has now been set out by the department of investment and public asset management under the union finance ministry as a memorandum entitled “New Public Sector Enterprise (PSE) policy for Atma Nirbhar Bharat”.  The PSEs have been classified in strategic and non-strategic sectors. 

The four strategic sectors are: (i) atomic energy, space and defence (ii) transport and telecommunications, (iii) power, petroleum and coal and (iv) banking, insurance and financial services.  In these four sectors, there will be a “bare minimum presence” of the existing public sector enterprises.  The remaining enterprises will be privatised, merged or closed down. 

As far as non-strategic sector is concerned, this policy would be that all PSEs shall be considered for privatisation, or, otherwise for closure.

It is this far-reaching plan for privatisation of PSEs that has got Indian and foreign big capital salivating. From the days of the Narasimha Rao government, the steps towards privatisation were disguised as “disinvestment” – a term which has been in currency till now. It was during the Vajpayee government that strategic sale of shares of PSEs began, which would be privatisation. Now in the second term of the Modi government, the new policy amounts to the virtual dismantlement of the public sector because in even the four strategic sectors, majority of the PSEs, most of them profitable, are going to be sold off – valuable public assets built up with public money. 

Many of the PSEs in the so-called strategic sectors have been run to the ground deliberately by the government in order to make the case for privatisation.  The ONGC, BHEL, BSNL have all been victims of the anti-public sector attitude of the government. 

For neoliberal governments, dependence on privatisation receipts grows as the fiscal crisis intensifies.  The union budget shows that there is a sharp decline in revenue receipts.  This is sought to be addressed by selling profitable revenue earning public assets.

The union budget has provided for Rs 1.75 lakh crore receipts from disinvestment of PSEs, when the 2020-21 budget had projected Rs 2.10 lakh crore as receipts from disinvestment.  Having fallen far short of this targeted amount, the government has not learnt any lesson and is going ahead with more aggressive privatisation. 

At a time when the economy is floundering, asset prices are at a low level.  The government will be selling these assets at a substantial discount resulting in a bonanza for both Indian and foreign investors.

The intent to privatise the financial sector is out in the open. In the budget, for the first time, there is an announcement to privatise two public sector banks and one general insurance company.  There will also be disinvestment of shares in the Life Insurance Corporation.  It is obvious that the two banks, which will be chosen to be privatised, will be the profitable ones. This is a precursor to the entry of the corporate sector into banking.

Once the financial sector gets privatised, the whole economy becomes vulnerable to the vagaries of capital flows.  International finance capital will be able to dictate terms, so much for Atma Nirbharata!

Net profits of profit-making PSEs are Rs 1.6 lakh crore and their dividends to the government amount to Rs 77,000 crore.  Selling off these assets will be the present and future revenue stream of the government.

That all this is being done in the name of Atma Nirbhar Bharat, is a cruel hoax.  On sale is BPCL, the second largest oil company.  Given the size of this enterprise, it is likely to be sold to a foreign oil company. This will weaken national sovereignty in terms of control of vital energy supplies.

In the defence sector, the privatisation-spree is leading to a select group of Indian corporates tying up with foreign weapons manufacturers.  Given the burgeoning military alliance with the United States, there is every danger of American multinational arms companies capturing key areas of defence production.  So much for national security and sovereignty. 

The privatisation drive, especially in minerals and natural resources goes against the constitutional direction in Article 39 (b) which directs the State to ensure that “ownership and control of the material resources of the community …..subserve the common good”.  Instead of the common good, what privatisation entails is loot of natural resources by private companies. 

Apart from economic enterprises, the privatisation drive is taking place in other spheres such as education, health-care, transportation and electricity supply.  This is a direct assault on the people’s right to education, health and basic services.  The privatisation drive has to be fought back by mobilising the widest sections of the people.  Already the announcement that the Visakhapatnam Steel Plant will be sold through a 100 per cent strategic sale has caused popular outrage and a mass mobilisation against the privatisation is going on in Andhra Pradesh.  It has become a people’s issue with the working class resistance at the core. 

The united bank unions’ forum has called for a two-day strike on March 15 and 16 against the proposed privatisation of two banks.  The insurance workers are also preparing for a long-drawn struggle. It is necessary to build a coordinated resistance of employees and workers of all public sector enterprises. 

The trade unions and the Left forces should work to mobilise the widest sections of people to fight back this war against the public sector. 

Prakash Karat is Member, Polit Bureau of CPI (M).