Shift in Centre’s disinvestment policy

There seems to be a distinct shift in the Centre’s policy towards disinvestment and privatisation of state-run enterprises. This change is particularly interesting given that the Narendra Modi government, in its first term, was charged with not being aggressive in letting go of the ‘family silver’, a euphemism used for selling public sector enterprises along with management control. Hence, it came as a pleasant surprise for long-term policy buffs when the government recently announced the sale of at least six PSUs, a couple of them which bring in profits and dividends. The biggest in the line up for sale was Bharat Petroleum Corporation Limited (BPCL), an oil sector company with a market valuation of over Rs 80,000 crore. Neelachal Ispat, a high-value company in steel sector with an annual output of Rs 4,000 crore has also been put up on the block. The Shipping Corporation of India (SCI) and Container Corporation of India (Concor), apart from others, would go into private hands. The Centre’s affirmation to sell loss-making Air India, BSNL and MTNL through transparent e-auctions has brought to fore the differences in economic policymaking matrix among the organisations affiliated to the Sangh Parivar.

The Modi government seems to be relying heavily on the sale of companies in its fold and disinvestment, to mobilise resources for funding its ambitious development agenda. Also, this aggressive sale in a bull market is expected to trigger an otherwise distressed economy that’s struggling to post 5% GDP growth this fiscal. But, the strategy may not have gone well with RSS-affiliated organisations like Bharatiya Mazdoor Sangh (BMS) and Swadeshi Jagaran Manch. The BMS recently held a nationwide industrial strike protesting Modi government’s policy of privatisation and disinvestment with slogans like ‘save PSUs’. The present government’s changed strategy reminds one of the policies pursued by the erstwhile A B Vajpayee regime during 1999-2004.

It was during Vajpayee’s tenure that 12 major enterprises were sold to corporates. The biggest example was to offload government stake along with management control in Maruti Udyog to Japanese major Suzuki that turned it around into a bellwether automobile market leader. Sale of VSNL, the external arm of BSNL, to Tatas was again significant. Similarly, enterprises with huge value, like Hindustan Zinc, Bharat Aluminum, IPCL, Paradeep Phosphates and Jessop had gone into private hands. Some of the best hotel properties held by ITDC are presently run by private companies. Opposition to aggressive privatisation as an economic policy instrument reflects that all Sangh Parivar organisations may not be on the same page. Within and outside the government, there may not be consensus on its policy to disinvest, swap equities of different PSUs to milk revenues or privatise state-run enterprises.