“No Business to be in Business”: Modi Government to privatize loss making PSUs. And no, this does not equate to ‘selling the family’s silver’
In a major step towards monetization and modernization, Prime Minister Narendra Modi has once again made it clear that the Government has “no business to be in business” and aims to privatize all Public Sector Units (PSUs) except for the bare minimum in four strategic sectors.
Speaking at a Webinar on privatization at the Department on Investment and Public Asset Management (DIPAM), PM Modi asserted that the Government’s duty is to support enterprises and not own or run them.
“Fiscal support to sick PSUs puts burden on the economy and they should no be run just because of legacy”, he added.
Several of these PSUs are in fact a liability as their losses have to be funded by the State. In FY 16–20, Air India ran up losses of Rs 27,255 crore and BSNL/MTNL lost Rs 62,725 crore. Funding these meant fewer schools, roads, hospitals for the nation’s further development.
Around 100 such underutilized and unitized entities, which were earlier being supported by the taxpayer’s money, would now be monetized valued at Rs 2.5 lakh crores. “The private sector brings modern technology, a change in the management mindset and creates more efficient jobs. This can increase efficiency of the system,” PM Modi added.
While the Left and Opposition have been quick to criticize the Government for its strong push for privatization and have called it “selling the family’s silver”, the real picture is very different. By asset recycling through using the proceeds from privatization to invest in the developmental work, this monetization would ultimately help the country’s poor.
Privatization is beneficial for the growth and sustainability of state-owned enterprises. Following the trend of privatization across the world, the Congress government in the 1990s had also introduced privatization after PSUs ran into losses due to political interference, amid hue and cry from various political and social groups.
To achieve an increase in the country’s output there is a need for disinvestment which will help in improving quality of the products by reducing unit costs, curbing public spending and raising cash to reduce public debt.