Disinvestment Discourse

-- Girish Ghildiyal

‘Orissa Bandh’ Against NALCO Privatisation

Orissa witnessed a successful statewide bandh on 19 September in protest against the Centre’s decision to privatise the National Aluminium Company (NALCO). The Bandh called by several major trade union organisations including the Party-led AICCTU and supported by all political parties barring the BJP, evoked massive response across the state. Despite its discomfort and vacillations of the leadership, the ruling Biju Janata Dal also participated in the bandh.

Major commercial establishments remained closed throughout the state and public transport system came to a halt as both buses and train services were affected. Most government offices recorded thin attendance. The majority of the Banks had their shutters down and educational institutions wore a deserted look.

More than 5,000 bandh supporters and activists of various trade unions and political parties were arrested and the police lathicharged bandh supporters at several places including the major industrial center, Rourkela. As for NALCO, production came to a halt at its two plants at Damanjodi and Angul as the employees participated in the bandh.

The CPI(ML) leaders and activists joined the protesting workers in Bhubneshwar and elsewhere in the state. At a time when the BJP-led central govt. is bent upon pursuing the disinvestment and privatisation plans, this mass protest from Orissa is bound to spill over.

The recent decision of the Cabinet Committee on Disinvestment (CCD) to put off privatization of BPCL/HPCL for three months has come as a breather to those who have been consistently opposing the sale of strategic and profit-making public sector undertakings (PSU). Though the individual ministers have their own reasons in opposing the privatization, it is clear that those with gung ho attitude in privatization have had to beat a retreat in the face of growing crystallization of opposition to privatization. However, media has been inundated with pundits’ warning that unless privatization goes on at full swing the economy of the country is doomed. The pressure is being built from all quarters – Standard & Poor (S&P), one of the largest rating agencies in the world, has downgraded India’s rupee debt to junk status citing, among others, “languid pace of reforms” as one reason.

In this context it is interesting to examine the official position. The Ministry of Disinvestments in its Annual Report 2001-02 underlines the need for privatization with the following arguments:

1. No business of government to be in the business – private ownership leads to better use of resources and their most efficient allocation. This is a worldwide phenomenon and the State can no longer meet the growing demands of economy.

This ignores the fact that it is being increasingly realized, especially in European countries, that in certain areas it is much better to have government ownership rather than private ownership. Some of the advanced nations like France have a strong and pervasive public sector and welfare state.

2. Inability of the government to raise resources – worldwide the governments are not able to raise taxes, or to pursue fiscal deficit/inflationary financing. At the same time there has been development of deep money markets and private entrepreneurship.

If low taxes and low fiscal deficit reads like something linked to now infamous standard International Monetary Fund (IMFs) fare to the developing countries, don’t be surprised. As for deep money markets, they have a huge component of footloose capital, and lots of private entrepreneurs are the speculators wreaking havoc on the economies across continents.

3. WTO commitments and technology – industry across the world have to restructure rapidly as the world turns into a global village. Public enterprises are slow to respond. Consumer interests can be better protected by regulation. Investment of public money to protect consumers is no longer a valid argument.

Under WTO regime, developed nations do not hesitate to put up barriers to trade when it comes to protecting their own interests. Their track record in helping out the countries which are victims of their own market fundamentalism is even worse – Argentina, one such victim, is denied more access to US markets. WTO probably has more utility as a scarecrow than anything else.

As regards regulations to protect consumer interest – what kind of regulation can be expected when the minister himself admits that private business interests are at the heart of many rivalries in the cabinet!

4. The objective of disinvestments programme varies from improving efficiency of the public sector to transformation of the society for making Indian economy a more vibrant, healthy and adequately equipped to contest in global arena.

The objective of disinvestments in practice is something else. It is to get a quick buck for the government. The Minister, true to his temperament, writes sensational stories about public sector in newspapers washing dirty linen in public. He has become more like a market operator – figuring out the best time to sell and predicting carnage in the market when the decisions are deferred.

Other objectives of privatization, as per the report, are:

There is necessity of the Government to move away from controlling, managing and running “non-strategic enterprises”.

What is a “non-strategic” sector? Is oil industry a “non-strategic sector” since it is owned by private oil companies in the US? What for George Bush is keen to control Iraq?

It seems like moving the goal posts as you go along.

Releasing unproductive capital locked up in non-strategic PSEs, for redeployment in areas that are much higher on social priority, such as public health, family welfare, primary education and social and essential infrastructure.

All the big enterprises sold or proposed to be sold through strategic sale – HPCL, BPCL, VSNL or BALCO are profit-making companies. The money raised through the sales has goes to bridge the budget deficit. Spending on the so-called ‘social priority’ sector is insignificant compared to spending on defence.

Don’t these fragile arguments put up by the Ministry prove that on the whole disinvestments have been inspired by precisely one thing – the market dogma? q