Nothing reveals the self-contradictions and hypocrisy of neo-liberalism better than the policy of privatisation. It was taken as an unquestionable axiom that public sector was inherently inefficient. Facts to the contrary were simply brushed aside. Whatever inefficiency was there was not accidental either. The private sector fattened on the subsidised inputs from the public sector. It thrived on public sector orders. Promoting private capital at the cost of public exchequer had been the raison d’etre of the public sector in India. Over and above this was the large-scale loot by the bureaucrat-politician nexus and bureaucratic mismanagement. Yet, many PSUs survived all this. When a section of private monopoly capital, buttressed by domestic and foreign finance capital, felt confident enough to vacate the public sector from some of its space, it was naturally branded as an economic anachronism. Its inefficiency was newly discovered.
That the state should withdraw from the economy was peddled as a gospel truth, that too in an underdeveloped country. Within a few years of reforms, when the public investment dwindled, and recession gripped the private industry, there was a clamour again for stepping up public investment. Despite liberalisation and opening up to foreign capital, when adequate infrastructural investment was not forthcoming, public sector was remembered again, for a redefined role. Nevertheless, the neo-liberals went hammer and tongs against many of the existing PSUs.
Public sector reforms in India go against elementary market principles. Disinvestment was proposed as the route for phased withdrawal of the state. Soon it became an urgent revenue imperative to bridge the fiscal gap. Outright sale has replaced partial divestment as the latest credo. But the way the Vajpayee Government went about it made a mockery of all business principles. Colossal public assets were to be disposed off in a most callous manner. State monopoly was derided only to convert it into private monopoly. What the proponents of free capitalism advocated went against the grain of capitalism, its principles of property and private ownership. Because, in this concrete instance, the property was public property. They wouldn’t let the state as the owner — of public property — get the best possible term for the disposal of that property. They wouldn’t let the government pump in money and restructure the units to make them economically viable and profitable before disposing them off. The neo-liberals wouldn’t let the viable ones compete with the private sector. Telecom privatisation best illustrates the way the public sector was bulldozed.
There could be no level playing field for the public sector. The BHEL was deprived of orders — for power plants set up by the government — which went to US multinationals. The company was pushed to the brink of sickness. It has now been decided to bring it under the hammer. Now, the General Electric, Siemens and ABB-Alshtom are competing with each other to grab this public sector behemoth.
In the case of huge public sector conglomerates, it is disinvestment in degrees. The government is also taking the corporatisation route towards privatisation. DoT was corporatised after quelling spirited resistance by the employees. But the values of the shares of the earlier state-owned telecom corporations like VSNL and MTNL constantly nosedived. Now the idea is to further break up these big corporations and privatise them by parts. In a swift move, the government almost pulled off a coup with its decision to reduce government stakes in public sector banks to 33% It was de facto denationalisation in a single stroke. The stakes in telecom corporations would be brought down below 50% AI-IA are about to be privatised despite a disastrous experience of half a dozen private airline companies. Big international airline companies, in collaborations with groups like Tatas, are out to grab the Maharaja.
It is not true that the PSUs, as a whole, are making a loss. According to figures collated by the ministry of heavy industry and public enterprises, a total profit of Rs 23,719 crore was earned by PSUs during the year 1999-2000. 116 PSUs reported profits while 98 PSUs reported losses. The total losses of the 98 PSUs came to approximately Rs 9,777 crore. A good part of this loss is accounted for by infrastructural projects like Konkan Railways. Yet, out of sheer ideological bias, public sector as a whole was painted black and the loss-making PSUs were declared beyond salvage. They proponents of reforms wanted them to be demolished. They wouldn’t even let the state improve them to get the best possible deal in the market. The Disinvestment Commission, which recommended precisely this in nearly a dozen of its reports, was first demolished. Yashwant Sinha speeded up the disinvestment process in this year’s budget by setting a target of Rs.10000 crore to be raised by disinvestment. Subsequently, in June he announced a package for outright sale of more than 40 PSUs. Meanwhile, the government also decided to close down many loss-making PSUs. While several units supposedly occupying the commanding heights of the economy were just scrapped, many blue chip companies like IBP, MMTC and STC have been put up for ‘strategic’ sale. Such units in the oil sector and state trading play a crucial role in macro-economic stability and their privatisaation has an important bearing on economic policy. Many of them are to be brought before the auctioneer soon. The strongest bidders, no doubt, would be the MNCs. The government has also declared its intention to take the ADR/GDR route for privatisation, offloading the shares abroad. The Cabinet took a decision that other than defence, railways and atomic energy there are no strategic areas which would be exclusive preserves of the public sector.
A few initial privatisation deals have become highly controversial. Shares
have been transferred below their market price. No wonder, the term privatisation
became synonymous with scams. A mafia became the midwife of the market economy
and market the mother of a multitude of scams. The neo-liberal logic of efficiency
went underneath the rubble as the saffron demolition squad turned their attention
from mosques to the ‘temples of modern India’ for a swift demolition
job.
The new private sector ventures that replaced the public sector, be it in telecom
or power, turned out to be no paragons of efficiency. ‘Competition’
did not deliver cheaper and better quality goods and services. Rather they extracted
newer concessions from the government, which was only too ready to oblige. Privatisation
is, thus, neither economic efficiency nor improved goods and services to the
public; it is plain loot -- wholesale grabbing of public wealth. Under the rule
of proponents of swadeshi, MNCs don’t bother to keep even their swadeshi
tags. This is colonial drain Mark-II, of course, under native rulers who swear
by swadeshi.
The VRS packages offered by the PSUs are becoming less and less attractive. For instance, the Lucknow-based Scooters India got rid of 1800 workers on VRS and armstwisting with just Rs.5 crore. Or, the PSUs are simply not bothered about VRS at all these days. Some of them are in no position to even offer VRS. They are offering bonds and shares to the workers. The workers have been left to the mercy of the new private managements. Already the number of workers in PSUs has come down by more than two lakhs due to VRS and closures. Unemployment due to privatisation via disinvestment will be many times higher.