The late Dattopant Thengadi, the founder of Bharatiya Mazdoor Sangh, neither subscribed to the communist view of nationalising the private sector, nor to the capitalist position of privatising all public sector units (PSUs). Both, the private sector as well as public sector have their important role to play in national development. The problem arises when one sector is thoughtlessly converted to another by compulsion. We need to define their respective roles.
Prophets of privatisation advise the government that it is the solution for all economic issues. For railway reforms, the dictum was “corporatise and privatise”. Even for bureaucratic reforms, the remedy prescribed was “privatise”. Thus nine private sector individuals were appointed as joint secretaries. We need not wonder if supermarket managers are appointed as secretaries in important ministries! The causes that led to the global financial crisis that spread from Wall Street to all streets should always serve as a lesson on the inherent flaws in the capitalist system, including privatisation.
The Obama administration that took charge immediately after the crisis initiated nationalisation, stopping banking reforms and mergers, controlling markets and share markets. But the unfortunate fact is that, the causes that led to the crisis are being imported by India in the name of reforms.
Largely profitable
We have Maharatnas in CPSEs, but seldom have we found them in the private sector. The fallacy of the propaganda about PSUs being a national liability is exposed in the Public Enterprises Survey 2018-19. It says out of the 249 CPSEs operational, 179 are profitable, and only 70 loss-making. The top 10 loss-making companies are responsible for 94.04 per cent of the total losses, and the remaining 60 companies make less than 6 per cent of the total loss. The State Trading Corporation of India, MSTC and Chennai Petroleum Corporation were profit-making CPSEs in the previous year, but now in the top ten loss-making. Suddenly, something went wrong which needs to be studied.
Among the top loss-making companies in India, there are only two PSUs, Air India and BSNL ranking sixth and seventh. The rest are private companies. When Amrapali builders could not deliver flats to its customers, the Supreme Court directed the flat to be completed by public sector NBCC. When Reliance failed to run Delhi metro, the DMRC took it over and ran profitably. Profitable air routes and workshops of Air India were sold by the UPA which later fell into losses. The captive coal blocks of the private sector also saw a production decrease and had to depend on Coal India for supply. Economic reforms are characterised by nationalisation of losses and privatisation of profits.
The government is in dire need of funds. The easiest way is sale of PSUs. Capital spending is not sound economics. India’s revenue generation needs a relook.
Sale of PSUs at throwaway price is a celebration for the real estate mafia. The infamous example is the sale of Centaur Hotel, Mumbai. Maharatna BPCL with ₹9 lakh crore worth properties was put to sale at a throwaway price of ₹74,000 crore for 53 per cent of the total shares. Air India has 2,500 slots worth $75 million in different international airports and landing rights in 30 countries, which were procured over decade-long bilateral talks.
PSUs are fortunate to have a large army of dedicated employees who are ready to give their lives for their industry. But PSUs are grossly mismanaged.
The writer is national president, BMS