Saturday, December 14, 2019

If a Private Player Can Revive a PSU, Why Can’t Govt?

Not a day passes without the government announcing some measure of privatisation. Civil Aviation Minister Hardeep Puri claims that public sector Air India has to close down if it is not privatised -- a remarkable statement by a senior government functionary for two reasons. First, if the private buyer is supposed to be able to revive the company (for otherwise why should anyone be buying it), then why can’t the government do the same?

Second, even if one accepts for argument’s sake that what Puri says is correct, his saying so is most bizarre because it amounts to a signal to potential buyers to scale down their bids for it.

A large number of public sector enterprises in the Asansol-Durgapur belt of West Bengal are being sought to be privatised, riding roughshod over the demands of the trade unions. Public sector telecom major BSNL’s employees are being more or less forced to accept voluntary retirement, so that the company can no longer remain viable and would have to be sold off. Such examples can be multiplied.

Of course, the Bharatiya Janata Party (BJP) government, with its total lack of understanding of the significance of the public sector and also with its closeness to the corporate-financial oligarchy, is prone to dismantling the public sector anyway. But now it feels an added urgency for doing so in order to cope with the fiscal squeeze that the economic downturn has brought in its wake.
To stimulate privatisation, international finance capital (and its leading institutions, such as the International Monetary Fund and the World Bank) have resorted to a fiddle, namely, to exclude the proceeds from the sale of public sector assets from the fiscal deficit; the government can, therefore, show a smaller fiscal deficit figure, one conforming to the “Fiscal Responsibility” target, by selling public sector assets. This is a completely illegitimate practice, but it is done for ideological reasons, for effecting privatisation.
14/12/19 Prabhat Patnaik/News Click
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