Planned Investment In India – Story of Inclusivity Nipped In The Bud
The rebuilding of India will take place only when new PSUs will be created in the new age growth sector and who will anchor the growth of the private sector.
IBEF
Many elections in India have been fought on the issue of eradicating inequality. We have had slogans emphasising the same, be it Naya Bharat (1951) Garibi Hatao (1971) or Acche Din (2014). Affordable education, healthcare, clean drinking water, public transport & housing has always found its place in the manifestos of political parties. Still, it has failed to be part of discourses in the legislature. The government of the day announces a plethora of mega schemes and promises heaven to all, without having any implementation blueprint.
In June 2015, Prime Minister Narendra Modi launched three flagship missions, namely, Pradhan Mantri Awas Yojana, Smart Cities Mission and relaunched JNNURM as AMRUT (Atal Mission for Rejuvenation and Urban Transformation). In the last five years, besides grandiose announcements, no relief has come to the common man. The Corona epidemic has brought to focus the inadequacy of social infrastructure on the ground resulting in a grim picture of millions walking on the highway.
Isolated schemes without focused purpose may result in negating the desired results. For example, the SRA schemes to house the slum dwellers in Mumbai and decongest the city have actually become a playground for nexus of builders and politicians. On the other hand, if I look at the five-year plans, especially the 2nd one, I see that urbanisation received a major thrust as a result of strategic industrialisation.
Two things took place whether intended or not: first, the establishment of towns started by having an anchor employer – a Public Sector Undertaking (PSU); and second, having the PSU invest in the social sector and thereby helping in urbanisation and promoting migration from villages in and around the region. As a result, PSUs became not only drivers of growth, but also structures of Inclusive growth.
Liberalisation and Globalisation should have ushered in a wave of transparency in the governance- but what it actually brought in was sale of public assets to private industry at ridiculously low prices.
“That’s the standard technique of privatisation: de-fund, make sure things don’t work, people get angry, you hand it over to private capital.” Noam Chomsky.
Liberalisation and Globalisation should have changed the way the governance pattern operated in the monopolistic era, thereby doing away with the control and restrictions on doing businesses and should have encouraged competition, so as to create thriving entrepreneurial culture. But what the Narasimha Rao Government actually did was to create a culture of nepotism by doling out public resources to people who had access to the power centre.
The narrative that should have established a differentiation between Good and Bad businesses was turned on its head and made a contest between private sector and PSUs, in which the PSUs were labelled as unwieldy and non-professional by applying wrong and absurd measuring tools. The issue is whether entities like PSUs should be measured only on Return on Investment or should they be also judged on Return on Nation Building.
Though the process of disinvestment started in 1991, it gained strength during Atal Bihari’s government of 1999 – 2004, when one after another flagship PSUs were put on the auction block. NDA-1 divested PSUs that were a drag on the finances of the government; however, since 2014 a new trend has emerged that the PSUs which are highly profitable have been put under the hammer.
If one looks at the economics of all 257 operating PSUs during 2016-17, then the Net Profit stood at ₹ 1,27,602 crore compared to ₹ 1,14,239 crore during 2015-16 showing the growth of 11.70%. While losses incurring PSU’s minimised to ₹ 25,045 crores in 2016-17 compared to ₹ 30,759 crores in 2015-16 showing a decrease in loss by 18.58%.
Hence, one can see that collectively PSUs have given positive gain of more than Rs One Lakh Crore to the exchequer. However, the business house owned mainstream media projects PSUs as a burden on the country. When the entire private sector is running on public money, be it borrowing from PSU banks and then creating NPAs or making PSUs like LIC etc. invest into them. If you follow the shareholding pattern of the top 100 listed companies in India closely, then you will see that in more than 60% of them the government of India could emerge as a majority shareholder.
However, as PSUs got privatised not only did it reduce the availability of spectrum of reserved jobs but it also created a more profound social impact on the dis-advantaged society spread across the length and breadth of the country. In fact, the majority of SC/STs think that the privatisation process was brought in by Congress to dilute the reservation process and hence educated SC/STs started moving away from Congress to regional parties.
On 27th May 2020, FM Nirmala Sitharaman announced that there would be a maximum of four public sector companies in strategic sectors, and state-owned firms in other segments will eventually be privatised. Immediately the SC, STs and OBC WhatsApp groups started screaming -A pandemic situation is being used to attack on the reservation.
Most PSUs were operating in the hinterland and have been entrusted with the social responsibility of upgrading infrastructure in the area of operations. Anybody who has been to Bhilai, Ranchi, Bhopal etc. will vouch for the tremendous improvement in the educational and health facilities available before and after the PSUs came into being.
Similarly, the PSUs created an entrepreneurial ecosystem by supporting the growth of ancillary units. Rise of Hyderabad as a pharmaceutical destination can be largely attributed to the presence of IDPL.
The key aspect of reservation in PSEs was that the SC/ST officers became role models for Dalit youths, generally, these officers were posted in the production facilities of PSEs which were at remote locations. Therein, the SC/ST officer would become part of the larger local SC/ST group, and youths followed their footsteps to the path of social development.
The officers and the Backward class associations of these PSEs created their own community service culture by helping students through advice and providing scholarships and more importantly by propagating thoughts and writings of Babasaheb and helping create an entire generation which believed in its capability to break the shackles of caste and poverty. In fact, the biggest support system for BAMCEF of Kanshiram came from the employees & officers of PSUs.
Rebuilding of India cannot just happen with slogans and by announcing schemes. The rebuilding of India will take place only when new PSUs will be created in the new age growth sector’s and who will anchor the growth of the private sector. Depending entirely on the private sector to build India is only going to deepen the inequality. If you look carefully you will see that the inequality gap became wide and deep post 1991 when the role of PSU started diminishing.
If Congress has to succeed in the hustings then it has to have a new vision of India, ironically drawn from the past – the 2nd five-year plan, albeit without deficit financing.
Arun Khobragade is Chairman of Babasaheb Ambedkar Social Innovation Council Making India Inclusive.