‘Disinvestment’ has always been a subject of deliberation in India. It had always been carried out for multiple reasons. Primarily, those institutions were disinvested which were making the taxpayer incur incessant losses and were also being unable to recover from those losses. Secondly, the disinvestment was carried out due to international conditions and policy-related issues.
When Russia had been disintegrated in 1990, India too faced its share of upheavals in trade. Also in the same year, the Gulf War exacerbated our situation. The then Chandrashekhar government was forced to devalue the rupee to meet its financial obligations. Moody’s downgraded India’s bond rating. We had to carry out structural reforms to take loans from the IMF and the World Bank. India had to allow for foreign investment through disinvestment in the state’s public sector units.
The Atal Bihari Vajpayee’s government had even created a Ministry of Disinvestment, with Arun Shourie as its Minister. Later, the Manmohan Singh government abolished the Ministry of Disinvestment, during which time, there was arigorous recruitment in the banking sector and the business of government banks flourished. As soon as it came to power, the Narendra Modi government created the ‘Department of Disinvestment and Public Asset Management’ for the sale. It seems that giving assets in the hands of private players is part of the BJP’s policy. Perhaps that is why, even profit-making institutions are being monetized.
How to understand the situation today? Net profit of all 257 PSUs in the financial year 16-17 was 127602 crores, which was 11.7 percent higher than 114236 crores in 2015-16. Due to which, the losses which were being incurred were also reduced to 25045 crores, which is 18.58 percent less than 39758 crores in 2015. Today, the government has earned about 25 lakh crores from the oil sector alone. The government itself is claiming to have an increase in the GST collection. The government has itself announced a 20 percent boom in the economy. Then why is there a need to sell the assets of profit-making institutions simply to raise 6 lakh crores? This question remains unanswered.
The assets worth 482709 crores have been disinvested in 30 years from 1991 to 2020. Out of this, disinvestment of 329917 crores has taken place during the 6 years’ tenure of the Modi government, while disinvestment of 6 lakh crores is proposed in the monetization pipeline. That means, after this disinvestment, the total disinvestment during Modi Ji’s tenure will be 929917 crores.
It would be apt to know that the Life Insurance Corporation was started in 1956 with a capital of only 5 crores, which today has assets worth more than 38 lakh crores. There are one lakh fourteen thousand employees, and its net profit is more than 2668 crores. It has given a dividend of 2610 crores to the government in 2018 itself, and its market valuation has increased by 53214 crores. Similarly, the General Insurance Corporation was started in 1972 with only Rs. 100 crores by nationalizing 52 companies, whose total assets are more than one lakh sixteen thousand crores today. Similarly, VPCL is a profit-making company. The government has full ownership in the Life Insurance Corporation while 86% ownership in GIC. Do these institutions weigh heavily on the country? Is it something not similar to uprooting of the trees that bear fruit? It is a well-known fact that during 1991, India was forced to comply to any condition put forward by the International Monetary Fund if it wanted to avail any new loan. Today, the circumstances are very different. On one hand, the Government of India wants to raise 6 lakh crores through disinvestment and on the other hand, it also announces from the Red Fort schemes worth 110 lakh crores. Thus, one thing is clear that this disinvestment neither appears to be carried out for meeting any financial obligation, nor for the purpose of appropriation. Perhaps, this is being done only to reinforce the idea of privatization.
(The author is a Freelance Journalist and Chairman of the MP Vichar Vibhaag)