Prime Minister Narendra Modi’s continuance
of the disinvestment policy appears like the tailing of UPA government’s
policy. Previously, the last NDA government had a disinvestment portfolio under
Arun Shourie and it went on to pull the disinvestment throttle in full swing.
The government’s plan of decreasing its share in public sector banks (PSBs) to
conform to Basel-III norms by 2018-19 is just another instance of showing
eagerness to disinvest in even profit making enterprises.
As per the earlier Cabinet decision, the
government is to dilute its stake in three of the major profit-making public
sector enterprises (PSEs) - Oil and Natural Gas Corporation (ONGC), Coal India
Limited (CIL) and National Hydroelectric Power Corporation (NHPC) Limited- to
garner an estimated total of around Rs. 45,000 crore based on the current
market prices.
The government claims that from a budgetary
point of view the sale of equity reduces the need for borrowing from big
financial institutions, like World Bank and IMF, which increases the interest
burden in future years. But this rationale for preferring disinvestment of
stock in profit-making companies to borrowing to finance budgetary expenditures
that are in excess of revenues is not clear from accounting point of view.
Making provisions of little extra expenditure in budgetary support can save
huge payment in dollars to overcome the debt.
The Union government’s reasoning that the
profits of some PSEs have gone down over the past few years are true. But many
in these companies and independent experts feel that the government itself is
to blame for it. What happened during the 2010 Cairn India-Vedanta deal in Rajasthan
smacks only of corruption. The Mangala oil rig was the largest onshore
discovery of crude oil in India. But on the withdrawal of Cairn, the partner in
business, ONGC, was to be the inheritor of the oil rig. However, the rig went
to Vedanta under spurious arrangements.
Instead of putting more in infrastructural
assistance, the government has always taken a back seat. Even after all this,
the PSEs have shown a positive growth, slightly slow may be. PSEs have played a
major role in devising strategies to absorb tough economic times like recession,
inflation. It seems privatisation has become an easier way for private
industries to work in fields developed by the PSEs.
Perhaps, the PSEs are first victims of the
economic climate fostered by neo-liberalism. Huge creation of crony
capitalistic market is only a tragic aftermath along with the drawing of lines
among those who can spend and those who can’t. Banks and other PSEs are just
the cases in point.