Government’s Structural Hits to Indian Economy

We know that the Indian economy is in the doldrums. But what we should also know is that the Modi government is handling this crisis by doing what it does best: destroying every single safeguard, every single institution. Let us have a look at the consequences of one of the government’s recent moves.

In the early years after independence, the government of India promoted several Public Sector Undertakings (PSUs) to ensure that India achieves industrial self-reliance. The government invested in practically every single sector: railways, steel, thermal power, oil and aeronautics and set up PSUs whose names are now part of everyday vocabularies in Indian homes. These PSUs have been the backbone of India’s economy, and have traditionally supported millions of livelihoods. What is the government now doing? It is in the process of dismantling several prized PSUs, including the IOC, ONGC and Ordinance Factories. In other words, disinvestment of PSUs is now fast becoming the NORM, rather than the exception in times of a crisis.

A Group of Ministers (GoM) has been formed, which along with the Niti Ayog, is recommending large scale disinvestment. These proposals are in the process of getting passed without ANY discussions in the Cabinet or the Parliament. What is the history of disinvestment? The process started with Narasimha Rao’s government. But what was a trickle, is now going to be a virtual waterfall! Let us get some sense of perspective. During 2009-2014, the Manmohan Singh government disinvested 1 lakh crores worth of public investments in PSUs. In Modi’s first term, this expanded THREE times, to 2.82 lakh crores. And now, Modi 2.0 plans to speeden this disaster by disinvesting a whopping 3.25 lakh crores in the next five years!

In fact, the government is planning to modify the very definition of PSUs. Till now, if the government retained a share of 51% or more (meaning controlling, maximum share) in any company, that was considered a PSU. Now, Finance Minister says that the government will reduce its holdings to 40% in PSUs! This figure of government share in PSUs could go down to as low as 26%. This is classic Modinomics! The government claims, spuriously, that the companies will still be notionally referred to as ‘PSUs’. It is making these absurd claims because changing the status of a company and removing the PSU status is politically dangerous. BUT the government WILL NOT have a majority, controlling share. This move holds all the elements of the BJP’s economic strategy: selling public interests to corporates, lies, manipulation and betrayal of millions of Indians including workers.

PSUs to Adani/Ambani: Modi Government’s Crony Capitalism!

• Oil: Take the case of Indian Oil Corporation (IOC). The government is planning to reduce its holdings to 52.18%, which will be a historic low in this important sector. The government is planning to sell its interests solely to the Adani Gas company, or to a joint venture which IOC controls along with the Adani Gas company. The public money of ONGC was used to buy out a Rs 20,000 crore scam ridden GSPC for Rs 7,700 crore and hard-earned savings of 38 crore LIC policyholders worth Rs 9,000 crore was used to save faltering IDBI Bank!
•  Defense: Going against the parliament’s Standing Committee’s recommendations, and acting instead on the Niti Ayog’s recommendations, the Defense Secretary has been told to corporatize all Ordinance factories by 15 October 2019. What are the implications? As long as the Ordinance factories are under the government, they will follow the government’s defense requirements. For instance, during the Kargil war, the government asked Ordinance factories to double their production, which they did. On the other hand, the government handed over some large defense contracts to 127 private companies, out of which 81% of them handed over their deliverables 6 months late! Clearly, the government, for all its nationalist chest-thumping, has no problems whatsoever jeopardising national security interests (if this helps its corporate friends!)
•  Railways: The Indian Railways is moving fast towards total privatisation as the Centre decides to auction 23 railway stations across the country as a part of Public Private Partnership (PPP) projects. The private players would be granted 45 years’ leasing rights for the commercial properties developed at these stations. It gives them right to commercially exploit railways’ land. The firms will also be allowed to maintain all the station facilities like power, platform maintenance, parking, food stalls, retiring rooms, etc.
•  Aviation: The Adani group has been receiving several plum contracts from the governments across multiple sectors – whether in aviation, power generation and distribution, oil etc. Even though the Niti Ayog has itself recommended that not more than two airports be handed over to a single company, the Modi government has given the Adani group control of 6 profit-making airports under the Airports Authority of India (including Trivandrum, Jaipur and Guwahati) for 49 years!
• Telecom: As the Indian telecom industry stepped into 4G spectrum era, all the private services providers, most prominent being including Mukesh Ambani’s Reliance Jio, were allocated spectrum; but curiously the public sector BSNL and MTNL were not allocated 4G spectrum!!! When Indian telecom industry is all set to provide 5G services, BSNL is still waiting for 4G spectrum allocation! Can anything be a clearer instance of perverse and discriminatory policies, where public sector units with full infrastructural capabilities are restricted from entering the business so that govt’s crony corporates can enjoy virtual monopoly!

A clear pattern is visible here. The Modi dispensation is hell-bent on selling out public sector undertakings. It is carefully selling public resources to private interests, in the name of addressing the country’s ‘fiscal deficit’. This is a clear betrayal of Indians – consumers, workers, and ordinary people whose tax money is going to be squandered in this blatant manner. 

The economy is crumbling and the govt is pushing hard its elaborate gameplan to drain, disintegrate and dismantle our hard built public sector to favour its crony corporates. In order to divert attention from this unfolding disaster, the govt is trying every trick in the book. Frenzy and divisiveness packaged as ‘nationalism’ is being drummed up so as to hide their destructive agenda to ruin the economic foundations, sovereignty and institutions of our nation! We Will NOT Be Diverted!

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