The Finance Minister has stated that she is not selling family silver but strengthening it. Is it true? Department of Investment and Public Asset Management (DIPAM) states that four major areas of its work relates to Strategic Disinvestment, Minority Stake Sales, Asset Monetisation and Capital Restructuring. Strategic disinvestment which is its heart claims DIPAM would imply the sale of substantial portion of the government shareholding of a Central Public Sector Enterprise (CPSE) of upto 50% or such higher percentage as the competent authority may determine along with transfer of management control.

I would like to quote two examples here, Videsh Sanchar Nigam Ltd which became Tata Telecommunication Ltd and Indian Petro Chemicals Ltd which was subsumed by Reliance Petro Chemicals. The new disinvestment policy has classified enterprises as strategic and non-strategic.

The strategic sectors are:

  1. Atomic Energy, Space and Defence
  2. Transport and Communications
  3. Power, Petroleum, Coal and Minerals
  4. Banking, Insurance and Financial services.

In these sectors the government will have bare minimum presence and the remaining will be considered for privatisation or merger or subsidiarisation with another PSE or for closure.

PSEs in non-strategic sectors shall be considered for privatisation, where feasible, otherwise such enterprises will be considered for closure. The Finance Secretary has stated that 151 PSEs will be privatised or sold.

Under the minority stake sale the government retains more than 51% holding and Management.  In 2020-21 alone, BOL, HAL, MDL, IRCTC, SAIL, IRFC and a few other public sector companies were disinvested under this scheme. We have seen earlier that after initial minority stake sale, the entire enterprises have been sold off. Asset Monetisation is the creation of new sources of revenue by unlocking the value of hitherto un-utilised or underutilized public Assets.

Ten foreign consultancy firms like BCG, KPMG, Deloitte etc are enlisted as consultants for the same. Is this self-reliance? The Assets include land, buildings and even sports stadiums which will be sold or leased to the private sector. Capital Management in short appears to be getting more dividend from PSEs.

Remember that it was the NDA-I government which started a Ministry for Disinvestment. Now, though the government says they are not privatising the railways, Rail Vikas Nigam Ltd, CPSE-ETE, IRCTC, Bharat 22 ETF, RITEs Ltd, MOIL Ltd, Mazagon Dock Shipbuilders Ltd,  THDC India Ltd, North Eastern Electric Power Corporation Ltd, Kamaraj Port Ltd, Security Printing and Minting Corporation India Ltd were listed for disinvestment in 2019-20.

Now, the government shareholding in Kamarajar Port and Mazagon Doc Shipbuilders Ltd has become zero.  In HAL, it is 75.15%, in Bharat Dynamics 74.93%, in RITES Ltd 72.2%, in IRCTC 67.4%, in NTPC Ltd 67.4%, in SAIL 65% and in the Indian Railway Finance Ltd, it is 86.36%. Sooner or later all these are likely to be totally privatised.

As per the Public Enterprises Survey 2018-19 the PSEs had a net profit of Rs.14295130 lakhs which is on an increase every year.  Their contribution to the central exchequer in 2018-19 was Rs.36880293 lakh which is also increasing steadily. Investment in Central Govt Enterprises is Rs.27569727 lakh. They employ a strength of 1032846 staff which was 1135675, two years ago. Internal resources generated were Rs.1807592 lakhs. Internal resources utilised as percentage of fixed assets were Rs.73744118 lakhs. Foreign Exchange earned was Rs.14337696 lakh.

Out of 1031049 employees employed in these enterprises, there were 180780 SCs, 101627 STs and 197428 OBCs. We have to also bear in mind that the reservation policy ends with privatisation. Public sector enterprises’ procurement from MSEs was Rs.3865806 lakh. Their capital expenditure is often more than the capital expenditure of the central budget.

They are family Silver.

Madam Finance Minister, you are not strengthening them but killing them. This is killing the Golden Goose. Farmers have understood this. People of the country will realise it soon.

Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.

Picture Courtesy: Press Information Bureau on behalf of Ministry of Finance, GOI

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