Selling out national public assets to private corporates has been a hallmark of BJP rule. The BJP has followed in the footsteps of the Congress in doing so, and has sought to beat the latter in the game, even as they engage in empty talk on “nationalism”.
The BJP government has created a record in this regard, by disinvesting PSU shares worth Rs. 2.53 lakh crore during its tenure. In contrast, the Congress-led UPA government had disinvested PSU shares worth Rs 1.08 lakh crore during their ten years in power.
Shares of central public sector enterprises, which employ over 12.3 lakh people, and public sector banks and insurance companies which together employ about 15 lakh people, are being sold off. This has been adversely affecting jobs and work conditions on the one hand, while allowing private and foreign corporates to acquire profitable Public Sector Undertakings (PSUs) for a song.
Under the Modi government, 2.4 lakh workers of public sector enterprises, or a whopping 25 per cent of the public sector workforce, have lost their jobs. At the same time, the proportion of casual and contract workers has increased from 36% in 2014 to 53% in 2018.
Running down Public Sector Undertakings to pave way for privatisation
The argument that is most commonly advanced by the proponents of privatisation of PSUs is that the public sector is “inefficient”. That many PSUs are making losses is held up as “evidence” for this claim. Now, making profits is not the only objective of the public sector, and profitability is not the same as efficiency. But even if keep these aside for a moment, at least two critical points remain – one, successive governments have been trying to privatise profit-making PSUs (because the selling of loss-making PSUs hasn’t been so “successful”), and two, PSUs, including profit-making ones, are deliberately run down and private players preferentially treated to pave way for privatisation.
Let us take a brief look at some examples in this regard.
Cash-rich PSUs like the Oil and Natural Gas Corporation (ONGC) and Life Insurance Corporation (LIC) are being squeezed dry by the NDA regime, with the long term goal of privatising them. The BJP government has forced ONGC to declare "special dividends" for the government, resulting in the company's cash levels decreasing steeply by 92% from 2016-17 to 2017-18. In 2016-17, ONGC paid a dividend of Rs 7760 crore, while in 2017-18, it was a record Rs 8470 crore. The Modi government also got the ONGC to bail out the debt-ridden Gujarat State Petroleum Corporation (GSPC), owned by the Gujarat government. Furthermore, ONGC was also forced to acquire, in January 2018, the central government's share of 51.11% in HPCL for Rs 36,915 crore. ONGC had to borrow Rs 35,000 crore for this purpose. Meanwhile the LIC was forced to buy 51% stake of the IDBI Bank, which has 28% bad loans.
One of the most important stories of a profitable PSU being deliberately run down is that of the Bharat Sanchar Nigam Limited (BSNL), which was denied a license to provide mobile services for five years even as private companies were allowed to offer mobile services. Succesive governments also allowed Reliance to violate rules and employ fraudulent methods which caused losses to BSNL while beefing up the private giant's coffers. The previous Congress-led UPA government undermined BSNL's efforts to acquire more mobile lines, thereby making it more difficult for BSNL to meet consumer demand. Reliance was meanwhile allowed to use a front company to acquire 4G spectrum to provide internet services, and then, by means of a further change in government rules, allowed to pay a small fee for upgrading to a license which allows it to offer full-fledged mobile services. The Comptroller and Auditor General (CAG) noted that the undue benefit that Reliance Jio thus received was to the tune of Rs 22,842 crore.
Air India is another PSU which is being wrecked by the unnecessary acquisition of 68 aircraft during the tenure of the Congress-led UPA government, with Civil Aviation Minister Praful Patel steering the decision. The domestic carrier Indian Airlines also ordered 43 aircraft. The total cost of acquisition of the 111 aircraft was Rs 41,596 crore, many times the net worth of the two individual companies and financed almost entirely by debt. The two companies were then merged, overriding vociferous opposition by employees' unions and at such great cost that the CAG termed the move "ill-conceived". As if these weren’t enough, lucrative routes such as those to the Gulf region were given away to private and foreign airlines.
With the Rafale scam out in the open, the BJP's willingness to surrender India's defence preparedness so as to benefit private and foreign players is well-known by now. The Rafale deal, which benefits Reliance and Dassault while harming the public sector Hindustan Aeronautics Limited (HAL) has been written about in detail elsewhere in these pages.
The BJP government has taken a number of steps to privatise defence production. The government identified four segments for “strategic partners” in defence production – submarines, fighter jets, helicopters, and armoured vehicles & tanks. The Defence Public Sector Undertakings (DPSUs) were barred from bidding for fighter jets and helicopters.
Indian private companies in defence production are marginal players compared to the much larger foreign Original Equipment Manufacturers, and are far less qualified compared to the DPSUs. The BJP government's preference for the private sector would, therefore, effectively mean more prominence for foreign companies in defence production for India. In essence, the "ultra-nationalist" BJP has chosen to weaken India's security interests by foregoing national self-reliance and making India increasingly dependent on foreign companies.
The Ministry of Defence has also decided to outsource 275 items manufactured by the 41 Ordnance Factories to the private sector by declaring those items as "non-core"! These include ammunition, bombs, small arms, and troop comfort items. The move threatens the jobs of 85,000 employees working in the Ordnance Factories, and would adversely affect the quality of the equipment and necessary items available to the armed forces.
The BJP government also tried to sell 26% shares of a profit-making DPSU, the Bharat Earth Movers Limited (BEML) which manufactures missile launchers, armoured vehicles, Tatra trucks and other defence equipment.
The employees of BEML resolutely opposed the move to sell the company's shares, holding several protests. BEML has a unit in Palakkad, Kerala, and the Left MPs from Kerala raised the issue in the Loksabha. MB Rajesh, the CPI(M) MP from Palakkad spoke in Parliament several times against BEML's disinvestment.
As a result of the stiff resistance put up by BEML employees and the Left, the central government was forced to announce in January 2018 that it was "deferring the strategic disinvestment of BEML".
The BJP government has accelerated the process of privatising natural resources like minerals, coal, oil and gas, forest, and water bodies. Private companies that operate in these areas are notorious for the violation of environmental laws, extremely poor working conditions, use of casual and contract labour, and indiscriminate displacement of people. But the Modi regime couldn’t care less.
The Modi government's forest policy even proposes to "develop" forest lands through a public-private partnership (PPP) model. This will mean forest land will end up in the hands of private contractors and real estate developers, who would proceed to loot and destroy forests in the pursuit of profit.
Under the BJP, the central government's allocation of funds for education as percentage of GDP declined from the already dismal level of 0.67% to 0.45% between 2014-15 and 2018-19.
Public schools and crucial programmes like Mid-Day Meal scheme have been starved of funds. Government funding for infrastructure development in public higher educational institutions is being replaced by loans which the institutions will be forced to repay by hiking fees. The Modi regime's preference for crony capitalists made for an ugly sight, as the government conferred the status of "Institution of Eminence" to the non-existent Jio Institute of the Ambanis.
The result has been that between 2010-11 and 2015-16, student enrollment in government schools across 20 Indian states fell by 13 million students, while private schools acquired 17.5 millions students in the same period. Student enrollment in private universities also has increased faster than the enrollment in public universities.
Just as in the case of education, public healthcare facilities have also been deprived of funds, so that people are increasingly forced to depend on expensive private hospitals, laboratories and so on. Instead of striving to provide universal and free public healthcare, the BJP government has chosen to surrender healthcare to the private sector by opting for a health insurance model. The result would be that the people and the government itself through its insurance schemes would pay huge amounts as premium to private insurance companies, a part of which will then go to mostly private hospitals. Once again, people's money will be used to increase the profits of private companies rather than for public welfare.
Historical monuments and natural sites
Even the management of monuments of national and historical importance, such as Red Fort and Taj Mahal, and natural sites such as the Pangong Lake in Ladakh and the Sunderbans National Park in West Bengal are being handed over to private companies. The Red Fort has already been handed over to cement and sugar manufacturer Dalmia Bharat Ltd, in spite of objections by historians and archaeologists who pointed out that the company has no experience in maintenance, conservation, preservation and interpretation of monuments.
How far the ruling classes have gone in their obsession with privatisation was brought into sharp relief by the recent fire incident in Arpit Palace hotel in Karol Bagh, Delhi which tragically killed 17 people. News reports noted that the handling of 101, the emergency number for fire emergencies, has been mostly privatised and is done by untrained employees. The staff reportedly were unable to even record the address properly when they received a call on the Arpit Palace hotel fire, resulting in a wrong address being given to fire-fighters who ended up taking time to figure out the location of the hotel. The extra time taken proved costly – the fire had overwhelmed the building by the time the fire-fighters reached the spot.
The Left Alternative
While the ruling classes and their parties such as the BJP and the Congress insist that the public sector is “inefficient” and that it would be better if PSUs and public services are privatised, the Left has held up a different model through its handling of the public sector in Kerala. The experience of the last two decades show that during tenure of the Congress-led United Democratic Front (UDF) governments, the PSUs in Kerala run into losses, while they turn around and start making profits during the tenure of the CPI(M)-led Left Democratic Front (LDF) governments.
The tenure of the UDF government of 2001-06 saw 96 public sector companies under various departments in Kerala registering an average annual loss of Rs 213.74 crore in the aggregate, statistics compiled by the State Public Sector and Autonomous Bodies Officers Federation (SPATO) showed. 17 units under the industries department had remained closed for a long time and their assets were slated to be sold off.
The LDF government which came to power in 2006 reopened these units and took steps to regain their assets. Loss-making units were turned around through a number of steps that included reorganising the management, settlement of dues to the banks and financial institutions, and periodic monitoring of performance. The PSUs were encouraged to support and cooperate with each other, and adequate budgetary support to them was ensured for their rejuvenation and modernisation. The acute shortage of workers and executives (a result of massive VRS during the previous UDF rule) was overcome through fresh recruitment.
As a result of such concerted efforts, the Kerala PSUs turned around and became profitable, registering annual average profits of Rs 292.45 crore in the aggregate during the 2006-11 tenure of the LDF government.
The PSUs began running losses yet again during the term of the UDF government of 2011-16, with average annual losses of Rs. 645.92 crore from 2011-12 to 2014-15.
As the LDF returned to power in 2016, the PSUs are yet again in the path of revival. The PSUs under the industries department, which had together made a loss of Rs 113 crore in 2016-17, made profits of Rs 34.19 crore in 2017-18. When the LDF took charge in 2016, only 8 out of 40 PSUs under the industries department were making profits. This number if expected to rise to 20 by the end of the financial year 2018-19.
All these reveal a stark difference between the approach of the Left towards the public sector and that of the ruling class parties. While the Left considers the public sector as crucial to the building of a better society, the Congress and the BJP consider it a nuisance which has to be done away with at the first available opportunity.
Policies followed by central governments led by Congress and BJP have, far from ensuring a "level playing field" for both the public and private sector players as is often claimed, actively seek to undermine the public sector.
The Left's approach, on the other hand, is to foreground the importance of the public sector in the provision of essential goods and services, controlling prices, counteracting private monopolies, ensuring investment in crucial sectors, and employment generation.
At a time when corporate-led "growth" has neither delivered growth in jobs nor in improvement in living standards for the vast majority of people, the alternative that the Left champions is a model which puts the interests of the working people first.