In his reply to the President’s speech, Prime Minister Narendra Modi had strongly countered those who use private sector as their political punch bag. He made it amply clear that the private sector is creating wealth and opportunities and one should not look down upon the private sector. Subsequent to it, in a recent webinar, PM Modi made a strong pitch of privatisation and asset monetisation of non-strategic Public Sector Units (PSUs).
Now, the Congress and the political opposition is busy in interpreting it rhetorically. “Modi is selling the assets of the nation”, “Modi government is serving the interests of Adani-Ambani” etc are the repeated rhetoric you may be familiar with.
So, is the concept of privatisation such a dreaded idea? What is the need for it? In fact, Prime Minister Narendra Modi himself answered all these question with great clarity. Taking the que from his speech, we try to break it down here.
सरकार जिस मंत्र को लेकर आगे बढ़ रही है, वो है Monetise और Modernise.
जब सरकार Monetise करती है तो उस स्थान को देश का प्राइवेट सेक्टर भरता है।
प्राइवेट सेक्टर अपने साथ निवेश भी लाता है और global best practices भी लाता है: PM @narendramodi
— PMO India (@PMOIndia) February 24, 2021
Is this not an act of selling precious assets?
The point is that many public sector units have not remained as an asset. Continuing them under the public sector further causes the decay. As PM Modi puts it,
“State-owned firms were founded decades back when the Indian economy’s needs and national priorities were different. They are not relevant in the present times which demands reforms.”
But the PSUs, in a way, belong to people. Is it right for the government to sell them?
It should be noted that often the government decides not to sell them or monetise them. It is people’s money, tax payers’ money which continues to be used to make up for the losses and inefficiency of these firms. Thus, refraining from the privatisation itself is the biggest disservice that any government can do to its people by pinching their pockets.
As PM Modi puts it,
“the money which is the right of the poor, right of youth is spent on these enterprises and hence this is burdensome on the economy.”
If everything is open to the private sector, how can government be assured that it can secure the public interests at crucial time?
Well, for this precise reason, government is committed to holding on to the enterprises that are of strategic importance.
Prime Minister Modi has said,
“PSUs should not be run only because it has a legacy or because it is someone’s pet project. We can understand the need if the public sector enterprise is meeting the needs of any specific or important sector or has strategic importance.”
If the enterprises under public sector are not useful, how can they be of use to the private sector?
That is the difference that Prime Minister Modi is drawing between running the government and running a business. Private enterprises exist for the very purpose of doing business.
For the government, the duty is to support enterprises and businesses through effective policy. As PM Modi puts it,
“The government has no business to be in the business.”
So, what are the possibilities that a PSU is taken over by private sector opens up to?
As PM Modi explained, it caters to the two needs: monetize and modernise.
Private sector not only brings investment it also brings in global best practises, top quality manpower and management.
The officers at the government level, however efficient they may be, are trained for policy making and running the administration for public welfare. They are not trained for running enterprises.
When govt talks about privatisation, how exactly does it wish to pursue it?
Prime Minister Narendra Modi has laid the specific roadmap for this, when he said:
“Today, there are many underutilized and unutilized assets under the control of the government. We have set the target to monetize around 100 assets in oil, gas, port, airport and power sectors with chances for investment opportunities worth ₹2.5 Lakh crore.”