scorecardresearch
Wednesday, Feb 01, 2023
Advertisement
Premium

Talking themselves into a corner

The Government is committed to a strong and effective public sector,’’ the new Government has said in the President’s address...

The Government is committed to a strong and effective public sector,’’ the new Government has said in the President’s address. No problem thus far—that is just a sort of mantra that is repeated in rituals. But the next half of the sentence breaks new ground—not with what the NDA government was doing, but with what constituents and props of the new Government have been saying thus far. The sentence continues, ‘‘whose social objectives are met by its commercial functioning’’. Now, that is certainly a novel thought! Thus far we were being told that the public sector units are not to function commercially because they are fulfilling ‘‘social objectives’’. That was the invariable answer when attention was drawn to the unconscionable losses that they were making. Now we are told that the ‘‘social objectives’’ are met by their functioning commercially!

Reality breaks in!

‘‘But for this,’’ the address continues, ‘‘there is need for selectivity and a strategic focus.’’ A giveaway—that is the sort of sentence that is put in to find a way out of the one that has preceded it! The next sentence shows the strain even more. ‘‘My Government will devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment.’’ As for devolving ‘‘full managerial and commercial autonomy’’, you have the long-running record of what the Congress as well as each of its allies and props have done over the decades to public sector units under their charge.

And you can see it today: every other day you get to read something about what is going to be done to prices of petroleum products; what do the repeated statements indicate about who is deciding the issue: the Ministry of Petroleum, or the petroleum enterprises?

Subscriber Only Stories
Focus on border areas, NCC plans to raise cadet strength by 8 lakh
With access as key, an MP district brings govt home to beneficiaries
Delhi Confidential: New Parliament building almost ready, MPs turn emotio...
Risks to growth: Entrenched inflation and depreciating rupee

Or is there an escape clause in the words of the address? Read them again: ‘‘My Government will devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment.’’ Is the claim now that, while the petroleum companies are ‘‘successful’’ and ‘‘profit-making’’, they are not ‘‘operating in a competitive environment’’? Which they certainly are not—in the retail sector they still have monopoly positions!

The sentence that follows is one which the very persons who now proclaim it used to ridicule! ‘‘Privatisation will be considered on a case-by-case basis.’’ ‘‘Ah-ha! Case by case, is it?’’ the shout went. ‘‘Or suitcase by suitcase?’’ Of course, after Harshad Mehta’s admission, that taunt got to be used by all except the Congress. But, suddenly it is evidence of non-ideological, pragmatic thought!

The next sentence is the one which will hobble the new government the most, but first a word about the one that follows that one. ‘‘Private industry will be inducted to turn around companies that have potential for revival,’’ the Government has had the President say. How come this sudden reliance on private industry? Less than full faith in public sector managers? In the efficacy of that nostrum—of devolving ‘‘full managerial and commercial autonomy’’? Or does that medicine work only when the enterprises are already ‘‘successful, profit-making companies operating in a competitive environment’’?

But to return to the previous sentence. It reads: ‘‘Chronically loss-making companies will either be sold off, or closed, after workers get their legitimate dues and compensation.’’ The last clause in it, of course, is redundant. Under the law, no company, to say nothing of a government company, can be closed without the workers being paid their ‘‘legitimate dues and compensation’’. And as for companies that are being sold, the shareholders’ and share purchase agreements in each disinvestment provide that at all times the strategic buyer will have in place a compensation scheme for workers who may want to leave that would be at least as generous as the one that prevailed when the company was a government company. So, the words are gratuitous and redundant—they are just a ploy, like so many others, to make out as if something new is being done specially for workers when nothing is in fact being done.

Advertisement

But I am on the companies which the Government says it will either sell or close—the ones that are, to use its expression, ‘‘chronically loss-making’’. The first question is: ‘‘How many years of losses, and what magnitude of losses make a company ‘chronically loss-making’?’’ Let me list a few specific examples. Could colleagues in the media please find out from the Prime Minister or Finance Minister which of these they will either sell or close?

Fertiliser Corporation of India: its accumulated losses as of March 31, 2002 (that is the latest date for which data is available in the public domain; all figures below refer to this date), are Rs 7,957 crore. It has been making losses continuously for 15 years. ‘‘Chronically’’ enough? Will it be sold or closed?

Rashtriya Ispat Nigam: its accumulated losses are Rs 4,302 crore. It has been making losses continuously for five years—and that in spite of hefty packages to enable it to get out of the red, in 1993 and again in 1998. ‘‘Chronically’’ enough? Will it be sold or closed?

Advertisement

National Jute Manufacturing Corporation: its accumulated losses are Rs 3,127 crore. It has been making losses continuously for 10 years. ‘‘Chronically’’ enough? Will it be sold or closed?

Indian Drugs and Pharmaceuticals: its accumulated losses are Rs 1,926 crore. It has been making losses continuously since its inception in 1961, except for four years when it was made the canalising agency for imports of some drugs. ‘‘Chronically’’ enough? As a series of packages given between 1993 and 2002 failed to revive it, will it now be sold or closed?

Hindustan Photo Films Manufacturing Corporation: its accumulated losses are Rs 1,829 crore. It has been making losses continuously for five years. ‘‘Chronically’’ enough? Will it be sold or closed?

Cement Corporation of India: its accumulated losses are Rs 1,638 crore. It has been making losses continuously for four years. ‘‘Chronically’’ enough? Will it be sold or closed?

Heavy Engineering Corporation: its accumulated losses are Rs 1,515 crore. It has been making losses continuously for seven years—in spite of packages to revive it given in 1972, 1975, 1981, 1989, 1997, and again 1999. ‘‘Chronically’’ enough? Will it be sold or closed?

Advertisement

Mining and Allied Machinery Corporation: its accumulated losses are close to Rs 1,200 crore. And that in spite of several relief packages—in 1973, 1976, 1980, 1986 and subsequent years. ‘‘Chronically’’ enough? Will it be sold or closed?

Hindustan Cables: its accumulated losses are Rs 867 crore. It has been making losses continuously for five years—in spite of a hefty relief package that was given in January 1999 in an attempt to keep it out of BIFR. ‘‘Chronically’’ enough? Will it be sold or closed?

Advertisement

Hindustan Steel Works Construction Ltd: its accumulated losses are Rs 846 crore. It has been making losses continuously for four years—it registered a profit one year because of reliefs it was given. ‘‘Chronically’’ enough? Will it be sold or closed?

Bharat Gold Mines: its accumulated losses are Rs 840 crore. It has been making losses continuously for five years. ‘‘Chronically’’ enough? Will it be sold or closed?

Advertisement

Indian Iron and Steel Co: its accumulated losses are Rs 797 crore. It has been making losses continuously for five years. Schemes to revive it have followed schemes. To no avail. ‘‘Chronically’’ enough? Will it be sold or closed?

Hindustan Copper: its accumulated losses are Rs 632 crore. It has been making losses continuously for five years. ‘‘Chronically’’ enough? Will it be sold or closed?

Pyrites, Phosphates and Chemicals: its accumulated losses are Rs 468 crore. It has been making losses continuously for ten years. ‘‘Chronically’’ enough? Will it be sold or closed?

Before you conclude that these in any case are the sort of enterprises that fall within the convolutions of the Government and will therefore be closed or sold, do bear a few facts in mind:

Hindustan Antibiotics has an accumulated loss of just Rs 174 crore—that is, it should be much less costly to sell or close than companies that have accumulated losses of thousands of crore. But Ram Vilas Paswan has already declared that it will not be sold or closed!

If a Paswan can stop the Government on a mere Hindustan Antibiotics, what can the props of this government not make it do in regard to companies like Indian Iron and Steel?

The core competence of companies like Hindustan Photo Films, I discovered, was the ‘‘goodwill’’ they are able to build up among influentials. No influential from Tamil Nadu will allow this derelict company, situated in Ooty as it is, to be either privatised or closed—accumulated losses or not, obsolete products and technologies or not.

Let the Prime Minister or Finance Minister even suggest that Hindustan Cables will be sold or closed, and see the fusillade that the CPI leaders in Parliament will let loose.

The list can be doubled in no time. There is also the manifest fact. When a unit is ‘‘chronically loss-making’’, strategic partners will be loathe to invest in it: after strenuous efforts spread over one and half to two years in each instance, we had to return over a dozen cases to the Ministry of Heavy Industry as not even a single investor came forward. On other occasions, when a bidder did come forward for such an enterprise, his bid was so low that the Government had no option but to reject it.

NEPA was a classic case. What are pictured as ‘‘assets’’ in rhetoric—the township of NEPA, for instance—were, to the prospective partner, value-depleters: you want to produce paper, why take on running a derelict sewage and water system also? Government rejected the bid.

In the case of Jessop, a company that had been lying moribund in BIFR for years, in the face of court cases and all, the bid was accepted. The result? In NEPA, workers and officers from the unit came to tell me, even wages and salaries have not been paid for close to eight months now. On the other hand, within just months, Jessop has indeed turned around.

All this is well known to economists within the Government. But they will be able to do little: particular companies apart, and the ‘‘commitment’’ of individual leaders and props of the Government apart, there is the general fact. This government depends on the Left parties. Among the residual base of these parties are the unions in these enterprises. Who would be so rash as to expect the Prime Minister and Finance Minister to have the Communists ‘‘sacrifice’’ this base?

In a word, profit-making enterprises will not be privatised. And ‘‘chronically loss-making’’ ones cannot be privatised. The Ministry of Disinvestment is abolished. The Department of Disinvestment continues! Revolution accomplished.

And then there is ‘‘the dog that didn’t bark’’, that is words that are missing from the President’s address. The Common Minimum Programme had said, ‘‘All privatisations will be considered on a transparent and consultative case-by-case basis.’’ The President’s address says, ‘‘Privatisation will be considered on a case-by-case basis.’’ Not ‘‘transparent’’ we can understand! But not even ‘‘consultative’’? And that from a government so dependent on daily directives, to say nothing of ‘‘consultations’’? A bold deletion, I would say.

Another scrubbing out reveals even more. The CMP said, ‘‘While every effort will be made to modernise and restructure sick public sector companies and revive sick industry, chronically loss-making companies etc…’’ Surely that was a bold promise. For efforts to restructure and revive sick public sector units have a vivid history.

The BIFR was created precisely to revive and restructure sick units—including sick public sector units. In spite of its efforts—in instances efforts spread over seven/eight years apiece—and in spite of very large concessions and write-offs, only a tenth of the units could be said to have been ‘‘revived’’ in any way.

The most telling experience is from the most ardent champions of revival—the Communist government of West Bengal. They set up a department for industrial reconstruction and revival two decades ago. Over a score of companies were turned over to this department for revival. Do find out from them how many of these got revived over 20 years of what, we must assume, were the most dedicated, as well as the most expert efforts. And notice what the remedy is on which that very government has now alighted! The West Bengal government has decided to close down two enterprises completely, and to seek to revive 10—not by ‘‘disinvestment’’, heaven and Marx forbid; but by converting them into ‘‘joint ventures’’ through handing over up to 74 per cent equity to private partners!

The President’s address scrubs out the words I highlighted. There are no words pledging, ‘‘While every effort will be made to modernise and restructure sick public sector companies and revive sick industry…’’. The sentence begins with, ‘‘Chronically loss-making companies will either be sold off or closed….’’ What should one make of this scrubbing out? That reality is breaking in? Or that ‘‘solemn commitments’’ made just weeks ago in that ‘Bible of Governance’, the CMP, are already being broken? That reformers in Government have triumphed? Or that the props have caved in to bourgeois compulsions?

And yet the convolutions over privatisation are just a symptom.

(To be continued)

First published on: 20-06-2004 at 00:43 IST
Next Story

‘Cong is frustrated because of its poor poll performance. That’s why the attacks on us’

Latest Comment
Post Comment
Read Comments
Advertisement
Advertisement
Advertisement
Advertisement
close