While presenting the Union Budget for 2025-26 on 1 February. Finance Minister Nirmala Sitaraman made several policy announcements aimed at further advancing the implementation of the privatisation program in several sectors, including electricity and insurance.
Nuclear Power generation
The finance minister in her budget speech stated, “Development of at least 100 GW of nuclear energy by 2047 is essential for our energy transition efforts. For an active partnership with the private sector towards this goal, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be taken up.”
Power generation using nuclear energy so far was reserved for the public sector. Total nuclear power generation capacity in the country as of now is only a little over 8,000 MW.
The proposed policy change will open up big profit opportunities for major power generation companies owned by the Tata and Adani groups, nuclear power equipment makers like L&T, as well as foreign equipment suppliers like Westinghouse of USA, Alstom of France, and Toshiba of Japan.
To enable the entry of private companies in nuclear power generation, the Atomic Energy Act will be amended. So far, foreign nuclear power equipment suppliers were refusing to supply equipment as the prevailing Civil Liability for Nuclear Damage Act held equipment supplier also responsible in case of any accident. It seems this Act will now be amended as per the demands of foreign nuclear power equipment suppliers.
Electricity Distribution
Indian monopoly capitalists including the Tatas, Adani, Goenka, Jindal, Mehta (Torrent), and Anil Ambani groups, who have already acquired a dominant share in power generation, now want to do the same in the other two arms of the power sector – namely, transmission and distribution. They want both the central and state governments to facilitate the take-over of the entire power sector by private companies.
In her budget speech the finance minister said, “We will incentivize electricity distribution reforms and augmentation of intra-state transmission capacity by states. This will improve financial health and capacity of electricity companies. Additional borrowing of 0.5 per cent of GSDP will be allowed to states, contingent on these reforms.” Her statement in effect meant that state governments will be given incentives for privatising electricity distribution and transmission.
This was confirmed by Prime Minister Modi while addressing a gathering of Indian and foreign capitalists in New Delhi on 15 February, He announced, “Now we are also promoting the private sector in the power distribution sector, so that there is more efficiency in it”.
Staunch united opposition of power sector employees, engineers and farmers had succeeded in defeating the attempts of the Central government to get the Electricity (Amendment) Bill approved by the Parliament. The Bill was meant to completely open up power distribution to the private sector.
Therefore, the Central Government seems to have changed its approach towards electricity privatisation. Instead of trying to pass a law in Parliament to push the privatisation program all over the country, the same program is now being carried out through state governments. The aim of this approach is to break the unity of power sector employees and weaken the opposition to privatisation.
Just a few months ago, the Government of Uttar Pradesh announced its plan to privatise Poorvanchal Vidyut Vitran Nigam and Dakshinanchal Vidyut Vitran Nigam. Power workers of Uttar Pradesh have been valiantly and relentlessly demonstrating against the plan under the banner of Vidyut Karamchari Samyukt Sangharsh Samiti, Uttar Pradesh. Power workers of other states have also realised that if privatisation in Uttar Pradesh is not stopped, it will open the floodgates to power privatisation in their states. They have therefore decided that power employees all over the country will unitedly support Uttar Pradesh power workers and even resort to a one day nation- wide strike on 26 June.
Insurance
Foreign insurance monopolies through their governments and the World Bank have been putting pressure on the Government of India to completely open up the insurance sector as they see huge business potential here, considering the population of the country. This was being resisted by Indian monopoly houses such as the Tata, Birla, Bajaj and Mittal groups, who have invested heavily in the insurance sector. Now that they have acquired sufficient experience in the insurance business and feel confident of being able to compete with foreign monopolies, these Indian monopoly groups are no longer opposed to the entry of foreign insurance companies. This is reflected in the Budget announce that the FDI limit for the insurance sector will be raised from 74 to 100 per cent.
Workers of public sector insurance companies have been opposing the opening up of the insurance sector to foreign monopolies, pointing out that it will place the savings of Indian people at the disposal of foreign monopoly capitalists.
Asset Monetization
Another approach taken by the government to weaken the opposition to privatisation has been through asset monetization of various government enterprises and departments. Under this approach the asset is given on long lease (30-60 years) for use of capitalists. The government claims that this is not privatisation as the ownership of the asset on paper remains with the government department/ enterprise. The claim has not succeeded in fooling workers who have realised that this is yet another form of privatisation.
The Budget announced an even more ambitious second monetization plan. The Budget announced, “Building on the success of the first Asset Monetization Plan announced in 2021, the second Plan for 2025-30 will be launched to plough back capital of `Rs. 10 lakh crore in new projects. Regulatory and fiscal measures will be fine-tuned to support the Plan.”
Public-Private Partnership (PPP)
The Finance Minister announced in her budget speech, “Each infrastructure-related ministry will come up with a 3-year pipeline of projects that can be implemented in PPP mode. States will also be encouraged to do so and can seek support from the IIPDF (India Infrastructure Project Development Fund) scheme to prepare PPP proposals.”
Public Private Partnership (PPP) is a deceptive form of privatisation. While it is called partnership, it is a lopsided arrangement in which risks and losses are borne by the public while the profits are enjoyed by private companies. It is a highly beneficial arrangement for capitalists and they therefore want the government to adopt it, particularly for high-risk projects.
Conclusion
While the Finance Minister in her budget speech did not announce the targeted amount of money to be received through the sale of public assets and services, the program of privatisation is being pushed in various forms. The monopoly capitalists are especially interested in this program at the present time, when there is inadequate demand for their goods and services. Acquisition of public assets, built with public money, provides them an attractive avenue for reaping maximum profits.