Odisha rail accident- BSNL’s commendable performance- Should India diminish its public sector, allow private oligarchs to profiteer?


Smt Nirmala Sitharaman
Union Finance Minister

Dear Smt Sitharaman,

I refer to the hasty, sweeping Central Public Sector Enterprises (CPSE) disinvestment policy announced by you in your Budget Speech in 2021 and further spelt out by the Department of Public Enterprises in their guidelines on 13-12-2021. As a sequel to it, Department of Investment and Public Asset Management (DIPAM), functioning under your oversight, has embarked on a highly indiscriminate CPSE disinvestment drive, which lacks application of mind and vision. From what one has seen so far, DIPAM seems to be blissfully unaware of the antecedents of the bidders to whom it is selling away highly valuable CPSEs and their assets. The two recently aborted cases of Central Electronics Ltd (CEL) and Pawan Hans bear testimony to this.

On the other side, Niti Ayog has joined the bandwagon of wholesale privatisation of the Indian economy at the cost of the public interest and has come up with the bizarre idea of “global champions capable of producing for the world” (https://www.niti.gov.in/battling-barrier-scale), a euphemism for choking competition and consciously promoting a few private oligarchs to rule the economy. In line with this, the government has introduced yet another questionable idea, the “Production-Linked Incentive ” scheme, which provides cover for giving outright subsidies to private companies through a first-come-first-served approach, a non-transparent way of choosing beneficiaries, held illegal by the apex court in the 2G Spectrum and Coalgate cases, without imposing any obligation on beneficiary companies to add net domestic value, without any commitment that they should supply products at globally competitive prices, that they should generate pre-committed employment opportunities and contribute to indigenous open-access R&D and technology development. These subsidies, spanning over the next 5 years, amount to a mind-boggling figure of Rs 2 lakhs crores. Compare this with a paltry amount of Rs 18,000 Crores for which the government sold its flagship airline, AIr India to a private company and Rs 210 Crores at which it sold the CEL, along with its assets the value of which far exceeds the disinvestment proceeds.

In times of disasters and emergencies, when private oligarchs fleece their customers and profiteer at the cost of the economy, it is the CPSEs that rise to the occasion and provide critically needed relief. During the hard times of Covid, it was the Railways, the public sector Air India and the State-owned public transport utilities that came to the government’s aid, whereas when Indian students caught in the Ukraine war were to be brought back urgently to India, the same Air India run in the private sector charged the government heavily.

At the site of the recent railway accident in Odisha, where the surviving passengers and their families urgently needed mobile connectivity, it was not private companies that came to their help. It was the telecom CPSE, BSNL, which suffered heavily at the hands of the government all these years, that set up an emergency mobile tower, offered free connectivity to traumatised passengers and their families and demonstrated the professional competence and social sensitivity of the public sector, as illustrated by the following picture.


While BSNL offered services free of cost, the two private telecom companies, which benefited immensely from the government’s extraordinary munificence of the recent 5G auctions with little competition, charged commercial rates. They used the BSNL tower, as usual!

The policy of the government seems to be to diminish the public sector at the cost of fulfilling its own welfare mandate spelt out in the Directive Principles of the Constitution, subsidise private oligarchs at the cost of the public exchequer and promote crony capitalism of the worst kind.

A blurred vision and a policy void; are they forcing India to lose its way?


Yours sincerely,

E A S Sarma
Former Secretary to the Government of India

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