By H. Srikanth
Nirmala Sitharaman, the Union Finance Minister, in her last budget address hinted at monetization that would ensure additional mobilization of resources for enhancing and sustaining infrastructure finance and for creating new assets. Thereafter the government organized a series of conferences, workshops and consultations with different stakeholders. As a culmination of the efforts, recently the government officially announced the National Monetization Pipeline and came out with a road map explaining how different sectors and Ministries would carry out the monetization process. The pipeline proposed covers twelve Line Ministries and twenty plus government assets. Apart from the core sectors like railways, roadways and power, the policy will be extended to management of seaports, airports, petroleum, natural gas, warehousing, sports and urban real estate assets. The policy seeks to mobilize over six lakh crore rupees within next four years.
The idea behind the Monetization policy is the claim that the government has unutilized or under-utilized assets, which could be rented out to the private parties for a fixed number of years and allow them to manage the assets to generate more income. The proceeds emanating from it could be used to maintain and also to create new assets. This idea of Monetization is consistent with the neo-liberal idea that the government has no business in running businesses; the governments should at best play only a regulatory role, leaving the economy to market forces. This idea is not something invented today by the BJP led NDA government. It has been experimented in some sectors after India opted for the policy of liberalization and globalization in early 1990s. They may have differences in strategies, but there is no ideological difference between Congress and BJP as far the policy of liberalization and privatization are concerned. Many PSUs were handed over to private capitalists. When they were in government; both involved private actors in management of assets like railways, airports and roadways. What the Modi government has been doing today is to take the process to a higher level, involving almost all key economic sectors, and openly announcing it as a government policy.
The outright sale of PSUs is resented and opposed by the trade unions and was resented by the majority of people. Understanding the public opposition to the policy of privatization, the Ministers and the bureaucrats are reiterating that the monetization policy that they have proposed does not intend to privatize the public assets. The ownership and control would still be with the government, and only the assets are handed over to the private partners for optimum use of the same, and for ensuring efficiency and growth. The monetization plan is tipped as an easy way to mobilize resources for nation building without imposing additional taxes, or taking loans from abroad. The Prime Minister justified the policy stating that the proceedings emanating from Monetization would be utilized for financing the welfare policies for the poor. The opposition parties in India are however calling it an outright sale of India for the benefit of private interests. Notwithstanding what the Opposition says or does, in public interest, it is essential for all of us to have a comprehensive understanding of the nature and dynamics of India’s political economy.
India is not the only country which has public sector enterprises. Many advanced capitalist countries also have them. Existence of PSUs per se will not make any country socialist. India went for building the public sector, not because it was socialist, but because on the eve of independence the private sector was still weak and averse to taking the risk of large-scale investments in capital intensive industries which require long gestation periods. The private sector which sought immediate profits therefore focussed then on consumer industries, and allowed the government to build public sector to create infrastructure and capital-intensive industries essential for the development of capitalism. In the name of nationalization, the government then took over the control of different loss-making private industries, banks and insurance companies. It was by taxing the citizens of the country that the government could mobilize several lakhs and crores of rupees to build PSUs and create public assets in the form of industries, mining, roadways, railways, airports, etc. Far from affecting economic growth, the public sector in India facilitated the growth of the private sector by providing them capital goods and services and assets at subsidized rates.
As long as the private sector in India was weak, it accepted the existence and relevance of the public sector. But once the private monopoly capital started accumulating more and more profits, it found the public sector as an obstacle to its further growth and development. It was at that point of time that a systematic campaign was carried on against the PSUs and the governments were forced to advocate liberalization and privatization as panacea for all ills affecting the Indian economy. Systematically, the private monopolies began to enter all sectors of the economy, including defence, which were previously assigned exclusively to the public sector. While some PSUs were outrightly sold to private parties at a throwaway price, in others the public equity was reduced considerably to facilitate the entry of the private capital. In sectors like railways, airports, etc., which continued to remain till date under the government control, private capital was encouraged in the name of providing efficient services. The government is now referring to the transfer of assets to private capital as privatization, whereas handing over the responsibility of administering the public assets as the monetization. This distinction between privatization and monetization is only pedantic.
It is true that the government is now in possession of several assets and that they need to be efficiently used. But here, there is a need here to distinguish between unutilized assets and already utilized assets. If there are any unutilized assets and the government is not in a position to put them into use, involvement of private capital to mobilize additional income is justified. But the government is yet to come out with the list of such unutilized public assets. Much of the public assets are already in use in some forms. If the government proposes to monetize even these assets which are utilized, it should show in what ways the Monetization of the assets to private capital would bring more proceeds to the government exchequer, compared to what the governments have been generating because of the direct control of the same. Will the private businesses invest more in the assets when they know that they need to hand over the same to the government after a few years? Are all the private players philanthropists that they don’t make use of the public assets for gaining maximum profits and instead contribute to the enhancement of the assets?
Further, what is the implication of the Monetization to the problem of unemployment? When the assets are directly managed by the government, the government is under compulsion to follow labour laws and implement policies such as the reservations and minimum wages. Is there any guarantee that the private players who take over the management of the public assets generate more jobs and strictly implement the labour laws? Does the government assure that it would not impose more taxes on the people, and allocate the proceeds from the Monetization for Health, Education and other essential needs?
Finally, over the last few years we have seen the manner in which the management of the seaports, airports and mines are handed over to select monopoly houses like the Ambanis and the Adanis close to the ruling regime, and how more competent and experienced private and public sector competitors were overlooked to benefit the chosen allies. Hence it is difficult to repose faith in the government’s assurances that all Monetization transactions remain transparent and would be based on competitive bidding. The people therefore have every reason to believe that Monetization is only a sophisticated form of privatization entering through the backdoor.
The writer teaches Political Science in NEHU. email: [email protected]