A massive escalation of privatisation has been announced through the budget speech presented by the Finance Minister on 1 Feb, 2021. So far, the Central Government was carrying out sector by sector, or even department by department privatisation, as in the case of railways. It has now announced the plan to privatise the vast majority of public enterprises as rapidly as possible.
The new policy for public sector undertakings (PSUs) says that the objective is “minimising presence of Central Government Public Sector Enterprises, including financial institutions, and creating new investment space for the private sector.”
At present, there are over 1300 central PSUs. The central government intends to reduce this number to not more than two dozen. In pursuit of this goal, a number of steps were announced by the Finance Minister in her speech:
- Sale of two public sector banks;
- Sale of one general insurance company;
- The sale of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Limited among others would be completed in 2021-22;
- Completion of sale of shares of LIC;
- East and West Dedicated Freight Corridors to be offered for running private freight trains
- Creation of a New Monetization Pipeline for monetizing roads, electricity transmission lines, oil & gas pipelines, airports, etc. Monetizing implies sale of part of assets of PSE, built with public money;
- Operation of 7 ports under PPP (public private partnership);
- Electricity distribution to be privatized by introducing one more distribution company everywhere;
- Public bus transport services under PPP;
- Incentives to States to take up disinvestment of their Public Sector Companies, etc.
The revenue target through sale of PSUs, including outright sale and bit by bit sale (disinvestment) has been set at Rs. 1,75,000 crore in 2021-22, which is more than five times what was achieved in 2020-21 .
The Finance Minister further announced that state governments will be encouraged to privatise all their PSUs, which number over 1000 across the country. The central government will offer an incentive package to state governments for this purpose.
On 4 Feb, it was announced that privatisation of the Rashtriya Ispat Nigam Limited’s steel plan at Visakhapatnam has been approved by the cabinet.
The plan to privatise most of the PSUs is driven by the need of monopoly capitalists to find new avenues of profit. Today the growth of private capital and profit is getting restrained due to the limited purchasing power of working people. The situation has been worsened by the pandemic. The loss of livelihoods and expenses on health have severely eroded the already low purchasing power of working people. Acquiring profitable PSUs at throw away prices is a preferred route for monopoly capitalists to get out of the crisis with their profits intact.
Life experience has shown that the privatisation of a PSU invariably leads to hundreds of workers getting thrown out of their jobs. Privatisation has also led to higher and higher use of contract workers who are paid one-third to one-fourth the wages of regular workers. Both permanent and contract workers are made to work longer hours without overtime. Working conditions become worse and safety is compromised. Existing unions are busted and new workers are not allowed to organize themselves. Job security disappears.
Besides being anti-worker, privatisation is anti-social, too. Privatisation also means the enterprise is not run for fulfilling social needs but purely in pursuit of private profit. When PSEs of railways, insurance, banking, electricity, etc are privatised, services become much more expensive, and even unaffordable to users and consumers because they are run solely to maximise profits. Many people are deprived of essential services.
Privatisation fulfils the greed of monopoly capitalists. Assets belonging to the people are sold to private Indian and foreign monopolies at throwaway prices. For instance, Bharat Petroleum, whose assets are valued at more than Rs. 5 lakh crores, is being offered for just Rs. 50,000 crores. Capitalists are given valuable real estate, plants and machinery, and a ready market on a platter to start making profit from day one of the privatisation. Experience shows that the capitalists pocket huge speculative gains on the real estate. In most cases, they do not have to make substantial fresh investments to carry on production and sale.
The new policy for public sector enterprises must be condemned by all the working people of the country. The government has no right to hand over assets built with public money for private profit to satisfy the greed of monopoly capitalists!