One hopes that the management transfer resulting from divestment of PSUs will result in better performance
Haunted by the economic slowdown and a failed fiscal policy, the Narendra Modi Government has decided to sell the family silver. With crucial sectors crying for urgent attention, the Government has bet on what has become a prerequisite for any democracy aiming to achieve development — the strategic sale of public sector enterprises (PSUs) to encourage investment from the private sector when options have plateaued out. As Margaret Thatcher had once said, “privatisation must be at the centre of any programme of reclaiming territory for freedom.” The decision of the Government to sell the five PSUs, including the Bharat Petroleum Corporation Limited (BPCL), is one such move. And in a first, it won’t allow other profitable PSUs to buy in, usually done to keep its shadow presence. Money thus gained from the transaction could spur revenue amid uncertainty over tax collections while at the same time also help the Government keep its fiscal deficit in check and meet disinvestment targets — against a target of Rs 1.05 lakh crore for 2019-20, only Rs 17,364.26 crore has been realised till date. But why did the once cash-rich enterprises, and even some of our prized Navratnas, which were conceived with a potential to become global giants, come to the brink? The reasons are many, prominent among them being excessive Government control, which led to the clasping of the decision-making power of the PSUs. This also hampered their competitive abilities in a fast-growing market as they had to face bureaucratic lethargy and tardy approvals. They couldn’t escape the burden of policy paralysis with no say in fixing prices for their own products. For long, the need for functional autonomy and freedom from political interference was felt but ignored by successive Governments.
Though management transfer of PSUs will result in better performance, the absence of an anti-trust law can lead to the emergence of monopolies and misallocated resources. What about the crucial issue of workers’ retrenchment? There are already tremors being felt as BPCL employees have called for a nationwide strike on November 28 amid fears of job losses and recruitment freeze. With unemployment at a four-decade high of 6.1 per cent, can the Government afford resentment? While there may be bailout with the buyouts, the fund infusion should be used rationally by the Government and not be frittered away or even end up as huge kickbacks. Also, it must initiate big structural reforms instead of selling just ill-maintained properties that could well have been its assets.