By Nantoo Banerjee
Prime Minister Narendra Modi seems to be out to wash the sins of three former prime ministers – BJP’s Atal Behari Vajpayee, Congress satraps Narasimha Rao and Manmohan Singh. Modi’s avowed policy to protect the strategic public sector assets from falling into the jaws of private corporate sharks, modernize and rebuild curable sick companies, make their idle immovable assets productive and turn them globally competitive, runs counter to the policies of all the three previous prime ministers.
During the 22-year period, under Vajpayee (seven years), Rao (five years) and Singh (10 years), thousands of crores-worth assets of large and promising PSUs were grossly underpriced and sold to ‘chosen’ private bidders at throwaway prices in the name of disinvestment. The last two decades also witnessed those governments taking highly controversial decisions to financially weaken some of the leading public corporations such as Air India, as if to facilitate or force their sale. But for the political paralysis of the scam-stricken UPA government, Air India, BPCL, HPCL, EIL and Balmer Lawrie among several others would have probably been sold, partly or wholly, well before the 2014 Lok Sabha polls.
The entire UPA was seemingly on a Olx-Quikr-style ‘Bech Deo’ mode. Instead, the new government is generally on a ‘repair-and-resurrect’ mode towards the public sector. No government stake sale in major PSUs is going to exceed 49 per cent as the state is keen to retain the management control. The stake sale is aimed at increasing market tradability of PSU scrips to secure higher value and enhance public accountability.
The new government’s policy seems to be playing a spoilsport much to the chagrin of those corporate sharks who thought Modi would be more generous than his predecessors in the matter of privatization of state-run corporations and financial institutions. Modi has already poured cold water on the previous government’s design to privatize PSUs such as Air India, BSNL, MTNL, Shipping Corporation, State Trading Corporation and Neyveli Lignite and close down Kudremukh Iron Ore Company (KIOCL). The government is weighing several options, including M & As wherever advisable, to improve their operations, financial viability and global competitiveness.
For instance, sick MTNL may be merged with BSNL, which is already assigned with a leadership task in Modi’s dream project, Digital India, and early completion of the National Optic Fibre Network (NOFN) connecting 2.5 lakh village panchayats within 36 months. KOICL, originally set up as an Indo-Iranian project, is being merged with National Mineral Development Corporation (NMDC). The profit-making Stock Holding Corporation of India, an efficiently run public sector investment advisory, won’t be forced on the sickly IDBI Bank’s lap. Modi is even thinking of reviving the terminally sick Indian Drugs and Pharmaceuticals Limited (IDPL) and assigning more responsibility to Hindustan Antibiotics Limited. The success of the Clean Ganga project may also resurrect the Central Inland Water Transport Corporation (CIWTC). Efforts are on to make Doordarshan and All India Radio modern and competitive and expand their reach both at home and, in due course, abroad. The ultimate goal is to see the two agencies operate more like German Deutsche Welle, Japan’s NHK and the UK’s BBC.
Spearheading the task of assigning stellar role to deserving PSUs is a crack team comprising some of the top favourites such as Finance, Defence and Corporate Affairs Minister Arun Jaitley, Communications and Law minister Ravi Shankar Prasad, Chemicals and Fertiliser Minister Ananth Kumar, Commerce and Industry Minister Nirmala Sitharaman, Civil Aviation Minister Ashok Gajapathi Raju Pusapati and Environment and Information Minister Prakash Javadekar. These ministers are clear about what they need to do with the departmental undertakings and how could they contribute to the national wealth and aspirations.
For instance, Prasad is very clear about the future of the public sector telcos. “We need these PSUs at least to ensure fair competition. And, they must be made strong and efficient,” explains Prasad on the role of BSNL. Similarly, Ananth Kumar feels the drug PSUs will have a big role in production of affordable medicines and generics for the poor. PSU banks and National Payments Corporation of India, under Jaitley, are into a mammoth task of ensuring ‘financial inclusion’ for all citizens. They are working overtime to make the Prime Minister’s Jan Dhan Yojana a real success. The thought of creating an outfit somewhat like Treusandthalt under the unified Germany to bring under its umbrella some 10,000-plus erstwhile sick East German companies for their rehabilitation, to deal with terminally ill PSUs may also be cited as an example of the seriousness with which the public sector is being looked at by this government.
The disinvestment department of the Vajpayee government, a good part under Arun Shourie, took some amazing decisions, including the handover of one of the world’s best performing petrochemical outfits, Indian Petrochemicals Corporation Limited (IPCL) to the Ambanis’ Reliance, Bharat Aluminium (Balco) to Sterlite’s Anil Agarwal, Jessop & Co to Pawan Ruia and Videsh Sanchar Nigam (VSNL) to the Tatas. The Vajpayee-Rao-Singh period also witnessed the sale of prime immovable assets of Centaur Hotels and ITDC Limited properties to various private parties, Modern Foods, the bakeries of which accounted for 40 per cent of the country’s bread production, and Lagan Jute Machinery Manufacturing Company. The value of their real estate assets alone was several times larger than their combined sale proceeds of the Government of India.
Hindustan Lever (now, Hindustan Unilever) struck ‘gold’ out of the sale of immovable assets of Modern Foods, which it acquired not owing to its interest in bread making but because of the hidden value of its land. During this period, the governments appeared to be under some kind of ‘external’ pressure to initiate the sale of some of the financial institutions such as the Unit Trust of India, Industrial Development Bank of India and Industrial Finance Corporation of India ignoring their immense contribution towards the evolution of the country’s private corporate structure.(IPA Service)