Several Ministries, Departments Raised Concerns over Modi Govt’s Privatisation Push: Report

The Narendra Modi-led Bharatiya Janata Party (BJP) government at the Centre has faced a pushback from several ministries and departments over the past year toward an unforeseen privatisation push by the government, a report said. However, Finance Minister Nirmala Sitharaman did put forth the Public Sector Enterprise Policy in the Union Budget for the 2021-22 financial report.

An exclusive report in Bloomberg Quint says that several ministries –  including defence, health, coal – and departments like atomic energy and space did have reservations about the disinvestment push. Sectors are said to be divided into “strategic” and “non-strategic” with the government aiming to have a “bare minimum presence” in the former while those categorised as the latter will either be merged, privatised or closed down.

The BQ report cited communication between the Department of Investment And Public Asset Management (DIPAM) and ministries after July 2020 obtained through the Right to Information Act (RTI), 2005.

The Finance Ministry, under which DIPAM functions, reportedly asked for comments from 49 ministries and departments through a note on July 6, 2020. Twenty one departments and ministries were said to have backed the move without any significant objections or observations. Seven departments wanted their inclusion in sectors marked strategic, three gave conditional approval, ten had suggestions and comments while seven others did not want to be part of the move.

In a reported letter on July 20, 2020, the Ministry of Defence sent back a letter to DIPAM which had been approved by the concerned minister, Rajnath Singh. The ministry said the sector should continue to be publicly-owned on account of “national security” and that defence manufacturing was “critically important due to their unique functionalities.” In its response, DIPAM reportedly said privatisation would “allow infusion of private capital, technology, innovation and best management practices”. Defence will be a strategic sector though.

The Department of Space also reportedly said that Antrix. Corp, a firm under its control, was tied up in litigation and that New Space India Ltd. – another company – was to be at the core of the government’s efforts to open up the sector. However, it did broadly support privatisation.

The Atomic Energy Department reportedly wanted two of its four firms to remain within its control and wanted that only a minority stake be sold in a third company. The Nuclear Power Corporation of India Limited (NPCIL) could be divested by 49% following a case-by-case review, the department mentioned, adding that the Uranium Corp. of India Ltd was engaged in working with uranium, a material “having a bearing on national security”.

The Ministry of Coal too pointed out that it was under criticism in “response to commercial mining” which was affecting production. “It has been the stand of the Ministry that CIL and its subsidiaries are not being privatised,” the ministry under Prahlad Joshi reportedly said, with his approval. Coal has been included in the strategic sector list.

The report mentioned that a number of ministries asked to be put on the strategic list, including the Ministry of Petroluem and Natural Gas, saying it would be “advisable” to do so. But, it did give an “in-principle” approval to DIPAM’s draft proposal.

The Ministry of Shipping reportedly sent a detailed 30-page argument for its inclusion into the strategic list, mentioning that all of India’s neighbouring countries like China, Pakistan and Bangladesh had national shipping companies. DIPAM, however, responded saying that when the privatisation of The Shipping Corporation of India Ltd had been proposed the ministry had not objected in a letter in October 2019.

The move to privatise most public assets came at a time when the COVID-19 pandemic was wreaking havoc, and the Ministry of Health and Family Welfare cited the work done by government hospitals in curbing its ill-effects, mentioning that healthcare services be included in the strategic list. DIPAM, again, brushed its concerns aside, saying the private sector was “well equipped” to meet production and development of vaccines.

The move to privatise public assets has been facing stiff resistance from workers unions across the country. Nearly 10 lakh bank employees were on strike on March 15, 2021, followed by those in the insurance sector. Over 27 lakh electricity workers and engineers were on a one-day token strike on February 3 against The Electricity (Amendment) Bill, 2020, and the Standard Bidding Document (SBD).

In January The Centre of Indian Trade Unions (CITU) condemned the Centre for its “desperate move” to divest ten per cent of its shares in the Steel Authority of India Ltd (SAIL), calling it detrimental to national interest and saying that it would benefit private corporates.

During the financial year 2019-20, DIPAM divested government held stakes in 16 public entities and received receipts amounting to Rs 50,298.64 crore. From 2014 to 2019, the amount received through divestment was Rs 2,79,671.17 crore.