Governance

Dismantling public sector : End of welfare state?

When carpetbaggers and crony-capitalists take over the public sector, 60 per cent of Indians will be permanently pushed out of mainstream economy and that will be the end of India as a welfare state. Along with that it will also be the death-knell of whatever is left of democracy write MG Devasahayam MG Devasahayam
Enter Vol.14 ISSUE 4-6 JULY-SEPT 2020

The Narendra Modi-led government is determined to dismantle the entire public sector in the country, conceived to achieve ‘commanding heights’ of our economy. Public sector today is the repository of huge national assets, including land and minerals, vital infrastructure, and huge productive forces. It is the wealth of the nation. While shouting a bogus slogan of ‘aatmanirbhar’ (self-reliance), the BJP government has done the exact opposite by allowing 100 per cent Foreign Direct Investment (FDI) in such strategic sectors of our economy like defence, railways, telecom, civil aviation, satellites, power, petroleum, mining, coal, etc. This will adversely impact the functioning of the PSUs (Public Sector Units) in the concerned sector and also compromise our national interests, including national security.

Dismantling the public sector became a part of the government agenda since 1991 with the official advent of neo-liberal policies. The concepts of self-reliant economy, economic sovereignty, balanced regional development, social justice, etc., were sought to be given a go by. The Modi government has intensified these policies. Soon after coming to power in 2014, this government wound up the Planning Commission and replaced it with the NITI Ayog, which is nothing but a corporate think-tank. The Ayog identified 74 central public sector undertakings (CPSUs), including 26 for downright closure and 10 for strategic disinvestment. The task was outsourced to Reliance Mutual Fund Managers to provide consultancy and execute its project of quick selling 10 CPSUs. Ironically, Reliance Group is reportedly itself interested in purchasing these PSUs at throwaway prices!

In the midst of the draconian pandemic lockdown, on May 17, 2020, in the guise of unveiling an economic recovery package, Finance Minister Nirmala Sitharaman made a grand announcement that government will privatise all CPSUs in non-strategic sectors… What is strategic and what is non-strategic is a well-guarded secret. Maybe, the Ambanis and Adanis of this world will determine this

Following this, in the last few years, the Central government has been taking calculated measures to weaken well-functioning PSUs and make them sick to pave the way for privatisation. The surpluses generated by these units, meant for modernisation and continuous updating, are being drained. PSUs are also being denied technology upgradations. Through constant threat of privatisation, PSU employees are being constantly demoralised. This, in addition to blatant ‘rent seeking’ by politicians at all levels, makes the PSUs prone to inefficiency and low productivity. Besides, many PSUs are forced to pay dividends to the government much above the statutory level, sometimes as high as 50 per cent or more. Overall, there is a well-planned design to make them sick and create ground for handing them over at cheap rates to favoured domestic and foreign buyers.

What is bizarre is the haste with which this blatantly anti-people agenda is being rushed through. So much so, in the midst of the draconian pandemic lockdown, on May 17, 2020, in the guise of unveiling an economic recovery package, Finance Minister Nirmala Sitharaman made a grand announcement that government will privatise all CPSUs in non-strategic sectors. While in the strategic sector there will be only up to a maximum of four PSUs, the private sector also will be allowed entry into it.

What is strategic and what is non-strategic is a well-guarded secret. Maybe, the Ambanis and Adanis of this world will determine this!

The paradox is that the announcement of this mega privatisation drive has been made under the Atma Nirbhar Bharat Abhiyan policy which is supposed to achieve reduction in import dependence and creation of a self-reliant India. The brazenness of the move and the urgency displayed prompted wags in the social media to come out with this meme: “BSNL lost to Reliance Jio; BPCL lost to Reliance Petroleum; ONGC lost to Reliance Gas; HAL lost to Reliance Defence.”

The NITI Ayog identified 74 central public sector undertakings (CPSUs), including 26 for downright closure and 10 for strategic disinvestment. The task was outsourced to Reliance Mutual Fund Managers to provide consultancy and execute its project of quick-selling 10 CPSUs. Ironically, Reliance Group is reportedly itself interested in purchasing these PSUs at throwaway prices

This could soon become a reality. Let us see why. Ever since Reliance Jio was launched on September 5, 2016, it has been reportedly biting into the infrastructure and facilities of the public sector BSNL with the tacit support of the BJP government. This PSU has been made to bleed continuously by denying it technological upgradation and through large-scale retrenchment of staff. Now with Reliance dominating the digital world, PMO is reportedly in a hurry to hand over BSNL to Mukesh Ambani on a platter. Sensing danger, BSNL employees have been resisting this devious move. So, demolition men are let loose and BJP MP Anantkumar Hegde calls the 88,000 employees of BSNL as ‘traitors’, saying that all of them will be fired from the PSU as government will privatise the company.

Blatant manifestation of such crony capitalism was described by former West Bengal Governor Gopalakrishna Gandhi while delivering the 15th D.P. Kohli Memorial Lecture at the conclusion of the CBI’s year-long Golden Jubilee celebrations in 2014: “Corporate greed has crossed all bounds…. We used to talk of black money as a parallel economy and so it continues to be. But Reliance is a parallel State. I do not know of any country where one single firm exercises such power so brazenly over the natural resources, financial resources, professional resources and, ultimately, over human resources as the company of the Ambanis. From Ambedkar, who spoke of economic democracy, to Ambani, who represents a techno-commercial monopoly of unprecedented scale, is a far cry indeed.”

Since then this ‘techno-commercial monopoly’ has grown exponentially. Last week Mukesh Ambani surged past Europe’s wealthiest man, making him the world’s fourth-richest person. He is now worth $80.6 billion, after amassing $22 billion this year, according to the Bloomberg Billionaires Index. Most of this additional $22 billion came through the benevolence of the government at the Centre. With many PSUs with vast assets lined up to be grabbed very soon, he may become the richest person in the world. Who knows, at this rate, soon enough from being ‘parallel State’ Reliance may become the ‘main State’!

Be that as it may, in the initial years of our Republic, public sector was created an instrument to attain a self-reliant economy and create the industrial base of the country. It played an important role in developing balanced regional growth. It was the public sector which built the major infrastructure of the country like power, transport, including railways, roads, ports, etc., when the private sector did not have the capacity or was not ready to take the risk of investing huge amounts of capital in these sectors which do not provide immediate profits. Thermal and hydro power projects, transport and communication, manufacturing/ production facilities for steel, defence equipment, ship-building, oil, coal, etc., were set up in the public sector. Research and Development taken up by the PSUs made a huge contribution to our technological and industrial advance.

Dismantling public sector means subjugating our national economic interests, our economic independence and sovereignty to the interests of international finance capital and vested interests. It means handing over our national assets, our national wealth to the corporates in a silver platter. And it means facilitating exploitation of our labour by the profit hungry corporates by imposing bondage on them. It means robbing the SC/ST of their statutory right to reservation. This will ultimately lead to the crushing of democratic structures and socio-economic institutions.

All this would mean that India is abandoning the ‘welfare state’ founded in our Constitution and adopt a ‘predatory state’ dictated by the corporates? Doing so in a poor and low-income country like India with very high population will throw out a substantial portion of its people from the mainstream economy. As is known, welfare estate is a concept of government where the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a decent life.

The concept of welfare state is embedded in the Directive Principles of State Policy (Part IV of the Constitution of India). These are guidelines to the central and state governments of India, to be kept in mind while framing laws and policies. They are the instruments of instructions in the governance of the country. Directive principles are classified as social and economic charter, social security charter and community welfare charter. Though these provisions are not enforceable by any court, the principles laid down therein are considered fundamental in the governance of the country, making it the duty of the state to apply these principles in making laws to establish a just society in the country.

The cardinal principles of state policy that ushered India as a ‘welfare state” are:

 That the citizens, men and women equally, have the right to an adequate means to livelihood;  That the ownership and control of the material resources of the community are so distributed as best to sub serve the common good;

 That the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

Public Sector is an important and critical tool and instrument of this welfare state. As it is, deviation from these cardinal principles of state policy in the last about 30 years has resulted in extreme concentration of wealth and socio-economic iniquities in the country.

How is it so? Let us look at the Global Wealth Report-2018 of Credit Suisse Group AG. As per this report the richest 10 per cent of Indians own 77.4 per cent of the country’s wealth and the bottom 60 per cent own just 4.7 per cent. The super-rich 1 per cent own 51.5 per cent of the country’s wealth. Credit Suisse is not a bleeding-heart NGO but a blue-blooded Swiss bank. Here is the chart 1.

The fact that India is among the most inequitable country in the world (top three) is borne from the chart 2.

Then Oxfam came out with its India inequality report in January, 2019. According to it, the wealth of Indian billionaires rose by Rs 2,200 crore a day in 2018, with the top 1 per cent of the country’s richest getting richer by 39 per cent as against a 3 per cent increase in wealth for the bottom-half of the population. The document, released before the start of the five-day World Economic Forum in Switzerland’s Davos, said 13.6 crore Indians, who make up the poorest 10 per cent of the country, have remained in debt since 2004.

The Oxfam study showed that “the wealth of the top nine billionaires is equivalent to the wealth of the bottom 50% of the population.” India now has a total of 119 billionaires, having added 18 new ones last year. Their total wealth crossed $400 billion, around Rs 28 lakh crore, mark for the first time. The country is also expected to produce 70 new dollar millionaires every day between 2018 and 2022, the study added. As we have seen, it has already produced the 4th richest person in the world!

Picture is the same now and may be a shade worse! All these when India had a strong public sector as a buffer to cater to some semblance of welfare and equity. Now, if the marauders are allowed to plunder the PSUs and sell them cheap to the oligarchs and carpetbaggers, even the fig leaf of India remaining a ‘welfare state’ as per the constitutional scheme of thing will vanish. Who will then provide water to distant hearths; healthcare and education to the deprived; electricity to remotest huts; telecommunication to the rural hamlets; road and rail transport to far-off places; banking facility to farmers and fisherfolk; and, above all, livelihood and employment to the mass of youth bordering on poverty?

When carpetbaggers and crony-capitalists take over the public sector, 60 per cent of Indians will be permanently pushed out of mainstream economy and that will be the end of India as a welfare state. Along with that it will also be the death-knell of whatever is left of democracy!  g

(The writer is a former Army and IAS Officer)

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