Scrap away the Bankrupt and Corrupt policy of privatization

July 2003 - March 2004 Index

Scrap away the Bankrupt and Corrupt policy of privatization - EEFI

India is passing through the second phase of privatization. The BJP led NDA government is pursuing the LPG policies vigorously by appointing a minister with cabinet rank for selling out public sector. In the first phase, privatization of Public sector was carried out on the pretext that the government could not shoulder the loss making public sector. More over, door is opened for Private sector (the sectors where Public Sector was shielded from the entry of Private capital) due to paucity of funds for developments envisaged. But in the second phase, the proclaimed philosophy has been changed. The Bank-Fund dictated policy to safeguard the interest of MNCs and imperialist forces has been unveiled. Now the policy is orchestrated for downsizing the government, retreating from all its phases of activities like industry, agriculture, trade, etc. The policy advocates and declares that private sector should be the engine of development. So the whole privatization process has become an instrument of transferring public property to private hands for a song much to the detriment of national interest and the industrial economy of the country, in particular. Corruption is woven intrinsically in this process, as we see in many examples.

Zuari – Masol combine purchased Paradip Phosphate for a song, literally. Making use of the post closing adjustments, they purchased it for Rs. 151.7 Corers and claimed and obtained Rs. 199 Crores from the government. The reserve fund of the company at that time was 176 Crores. In the same way, Hindustan Lever received Rs. 12.6 cores in addition to Modern foods. Centaur Hotel near Mumbai Air Port was sold to M/s Bhathra Hospitality, who is near and dear to National RSS leader ship, for Rs. 83 Crores. With in the next 4 months it was resold for Rs. 115 Cores. 45% of the VSNLs share was sold to Tatas for Rs. 2590 Crores. When Tatas gained the control, they first took away Rs. 1200 Crores from the reserve of VSNL and also collected 1000 Crores by selling other equity share holdings. Controlling shares of Indian Petro chemicals Ltd was sold to Reliance Industries Ltd, i.e. Ambanies for Rs. 1491 Crores while IPCL is having a reserve and surplus of Rs. 2946.13 Crores The Sterlite group has acquired the equity and management control of Hindustan Zinc Ltd at a price of Rs. 445 .00 Crores while this PSU has a reserve fund of 737 cr. and an estimated asset base of around 10,000 Cr.

In power sector, after Orissa, Delhi Vidyuth Board has been unbundled and the distribution wing has been completely privatized. Ambanaees and Tatas purchased it at a very consessional price. Gridco owned by the State is purchasing power from the generating companies at an average price more that Rs. 2/Unit while they are giving it to Ambaness and Tatas for an average of Rs. 1.50 /unit. The huge difference to the tune of Rs. 4000 Crores is met by the State exchequer in the form of subsidies, which are actually channeled to Ambanies and Tatas and their political clients. Tatas and Ambanies are selling power to the consumers at an average of around Rs. 4.20 per unit.

Electricity act 2003, recently enacted by the parliament is really the formulation of a legal framework for the total privatization of power sector and the subsequent open market and market driven pricing of electricity.

The above shown are only examples.

The decision of government of India was to collect Rs. 45000 Crores By selling PSUS and its equity shares. But the achievement was only 25000 Crores. This shows the glaring corruption in these deeds.

The target fixed by government of India during 10^th Plan is 78000 Crores The PSUs in the queue are the most efficient and highest profit earning companies i.e. ONGC, IOC, HPC, GAIL, BPC etc. ONGC is the No.1 upstream oil PSU, which has attained the landmark height in earning profit of Rs. 6197 Crores and has paid a dividend of Rs. 1996.3 Crores during 2001 – 2002. IOC is the leading refinery and marketing giant in the down streamside with a profit mark of Rs. 2886 Cr during the same period. BPCL earned a net profit of Rs. 835 Cr while HPCL earned Rs. 788 Crores during the same year. The dividend paid to Government of India by IOC, BPCL & HPC were Rs. 856.54 Cr, Rs. 330 Cr and Rs. 340 Cr respectively. With the increased corruption of NDA government and in the present economic system there will not be any apprehension to the target fixed by the GOI in selling out the PSUs and the fate of these gold mines of the nation. It is interesting & note worthy that as per the recent policy directives, no other PSUs are allowed to participate in the bid of selling equity of PSUs on the protext that it is not true privatization

Also it is to be noted with grate emphasis that the total contribution of PSUs to exchequer on account of corporate tax, Excise duty, Customs duty and other duties, dividend and interest on loan etc, for the year 2000 – 2001 was 60977.97Crores. This is when the most favoured private sector has on outstanding dues towards payment of IT, Corporate tax, customs duty etc. to the tune of 60,000 Crores

In the year 2000 – 2001 the net profit earned by PSUs is Rs. 15653 Crores, which is 18.17% of equity. This is no way inferior to private sector, rather superior to it, which defeats all the false propaganda unleashed against the PSUs in a glittering way.

Dismantling of Public Sector based on the Fund-Bank dictated policy of privatization is nothing but filtering away the revenue earning assets of the government and consuming the capital for fiscal deficit, which is rightly termed as ‘selling the family silver to pay the butler’. MNCs and Indian Monopoly houses grab subsequently strategic sectors, which were protected under PSUs. This process involves retrenchment of workmen both immediately before and after privatization, as we have seen in the oil companies and many of the Electricity Boards. 5 Lakhs of employees were reduced from PSUs in the last decade.

Consequent to all these, the planned, balanced and required development of the country safeguarding the interest of industrial and agricultural workers, peasantry, rural masses and other working people of India as dreamed by the freedom fighters and nation builders are becoming a miragh. The most dangerous impact of dismantling PSUs in strategic sector like power, oil, telecom, etc is that it is really a threat to national defense.

United resistance movement is also developing simultaneously against these. It is inspiring to remember the heroic anti-privatization struggles of the workers of Dalla Cement Factory, BALCO, NALCO, COAL INDIA LTD., different State Electricity Boards, BPLC, HPCL, National Banks and Insurance Companies etc. The success of May 21^st strike of 2003 was the logical culmination of all these in which more than 4 Crores of workers participated. One of the most striking features of the May 21^st strike was the massive participation of workers in the strategic sectors like energy and finance.

The international and national experience of the consequences of privatization is shocking. The recent consequences of power sector privatization in USA, literally shocked and stunned white house on August 15^th of this year and distorted the life of USA and Canada for more that 30 hours. Many lost lives. This was after the bitter experiences in California and Mondana States. Government of India is not learning any lesson from these experiences or from our own national experiences, because the people at the helm of affairs are bonded to the interest of MNCs and Big Monopoly houses, both Indian & foreign. But tendering lip service to the people of India and tendering actual service to the capitalists classes shall not be endured by the people forever.

So the 5^th All India conference of Electricity Employees Federation of India demands Government of India to scrap away this bankrupt and corrupt policy of privatization along with other LPG policies expeditiously. The conference also express its staunch support to the National Platform of mass organizations in carrying forward the task under taken to fight out this Anti-people and Anti National policy more vigorously with higher forms of struggles and broader support of people. The conference call up on the electricity employees all over the country to rally round to make this noble endeavor a grand success.


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