The privatisation of the public sector and monetisation of assets are not good for India and disinvestment in public enterprises over the years has led to the concentration of economic power, a trend that is disturbingly on the rise taking us towards an oligopoly.

“Privatisation: An Affront to the Indian Constitution” by Peoples’ Commission on Public Sector and Public Service headed by Thomas Isaac, former Finance Minister, Kerala and E.A.S. Sarma, former Secretary, Union government, has highlighted the pitfalls of privatisation.

The Union government led by the National Democratic Alliance (NDA) is committed to an aggressive push towards privatisation of national assets having a bare minimal presence in “strategic” sectors. It has decided to relinquish control or shutdown its companies in all other sectors of economy.

This agenda of privatising the public sector and alienating public assets could cause certain irreversible and severe damages to the nation’s polity and economy.

M.G. Devasahayam in his preface mentions that dismantling the public sector and monetising public assets means subjugating our national economic interests, our economic independence and sovereignty to the interests of international finance capital and corporate entities. It means handing over our national assets, our national wealth to the oligarchs on a silver platter.

This agenda of privatising the public sector and alienating public assets could cause certain irreversible and severe damages to the nation’s polity and economy.

Public Sector and assets built by the sweat and toil of the people and their tax-money on their land belongs to them and not the government of the day which is there, only on short-term contract like a tenant. A tenant cannot alienate the house. The Union government led by the National Democratic Alliance (NDA) is committed to an aggressive push towards privatisation of national assets. Disinvestment of the PSUs has the effect of shrinking the space available for reservations for the SCs/STs/OBCs, which incidentally negates the commitment given by the BJP in its 2019 Election Manifesto.

The pursuit of privatisation as state policy necessarily shrinks the space for the state to be able to fulfill its constitutionally guaranteed role, which would result in long term adverse impacts

in empowering the disadvantaged communities, giving them social status and dignity.

Contractualisation, an outcome of deregulations and privatization, puts the workers outside the scope of the laws governing reservation thereby subverting the affirmative action. The central sector public units had 22 lakh employees in 1989-1990 but by 2019-20 this has already come down to just 10.64 lakh, a decline of 52%. Most of this decline was due to the increasing use of workers on contractual terms.

The fact is that the employment of such workers would be outside the scope of the constitutional guarantees. Public Sector Banks, which are bound to follow reservation norms, employ 11 lakh regular employees. However, an almost equal number are employed as Business Correspondents engaged on contractual terms. All actions of the state can be challenged in a constitutional court. No such challenge can be brought against a private company jeopardizing rights of labour rendered helpless against the imminent possibility of retrenchment.

There is a danger of monopolies. The lease exercise would allow the private leaseholder to exploit their monopolistic control of these assets without any restraint. This would only further concentration of wealth and is to the detriment of a healthy democracy.

Privatisation means the nationalisation of losses and privatisation of profits PPPs are structured such that the state incurs most of the financial burden and the losses, the private partner has free and unhindered access to profits.

For one, the government has succeeded in influencing the middle class and public opinion through relentless propaganda that the public sector cannot be efficient and is a drain of government resources. Perhaps the resistance to privatisation has also started to suffer from fatigue. And the government is undermining the functioning of the existing public sector so that sooner or later there would be no alternative to privatisation.

Such is the desperation of the government that they are willing to give extensive concessions to make privatisation attractive in the current forbidding macro-economic environment, even sacrificing the revenue objectives. There are many ways in which corporate governance practices need to be improved in PSUs. But one of the important things that need to be done is to improve the interface between the political authority with the technical and managerial bureaucracy in the PSUs. Each loss-making PSU has its own reasons for losses, which need to be understood and addressed. To blame PSUs for their shortcomings and justify disinvestment will defeat the primary purpose of setting them up as instruments of the State under Articles 12 and 19 to enable the State to fulfill its functions as a socialist welfare state. 

  V K Gupta is Spokesperson of the All India Power Engineers Federation, and views expressed are strictly his personal