National

Golden period of privatisation

P. Manoj | | Updated on: Dec 06, 2021

Divestment has never been the same again — either during the UPA or the NDA rule

Atal Bihari Vajpayee’s full five-year term as Prime Minister, heading a National Democratic Alliance (NDA) Government between 1999 and 2004, can be described as the golden period for privatisation of public sector undertakings (PSUs), a thorny and sensitive political issue.

While Congressman PV Narasimha Rao as prime minister started the disinvestment of PSUs through minority stake sales earlier, it was Vajpayee who took the bold gamble of taking the asset sale process to an entirely new realm by opting for privatisation of these entities, which was euphemistically called as “strategic sales”.

Vajpayee picked an able lieutenant in Arun Shourie, to carry out his plan.

The NDA Government first carved out a separate Department of Disinvestment which was later converted into a full-fledged ministry helmed by Shourie with Pradip Baijal as the secretary. A separate Cabinet Committee on Disinvestment (CCD) was set up to consider and clear transactions.

The zeal with which the Shourie-Baijal duo went about their job with the backing of Vajpayee is reflected in the sheer number of privatisation deals.

Privatisation deals

Bharat Aluminium Co Ltd, CMC Ltd, Hindustan Zinc Ltd, HTL Ltd, Indian Petrochemicals Corporation Ltd, Modern Food Industries Ltd, Paradeep Phosphates Ltd, Videsh Sanchar Nigam Ltd, Maruti Udyog Ltd, two hotel units of Hotel Corporation of India Ltd and 17 hotel units of Indian Tourism Development Corporation Ltd (ITDC) were sold to private firms, while IBP & Co Ltd was acquired by Indian Oil Corporation Ltd.

The privatisation process would have reached staggering proportions had the Supreme Court not stepped in to halt the privatisation of oil refiners Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), observing that the plan to privatise these two firms required parliamentary backing.

“…these are not the crown jewels of India’s economy but bleeding ulcers,” Shourie told this correspondent in an interview to BusinessLine at the time when pressure was mounting from his cabinet colleagues such as Ram Naik of BJP, George Fernandes of Samata Party (the Defence Minister who was also the NDA Convenor), Pramod Mahajan of BJP and Sharad Yadav of Janata Dal, to turn back on attempts to privatise some of the PSUs.

Opposition

Opposition came not just from within the NDA Government but also from the bureaucracy as control over PSUs meant jobs, patronage and the ability to make money through PSU contracts. The NDA Government was also attacked by the Left Parties for privatising PSUs.

The Swadeshi Jagran Manch was also against disinvestment and demanded that the Disinvestment Ministry be disbanded, while the Bharatiya Mazdoor Sangh (BMS), the trade union outfit owing allegiance to the BJP, told the NDA Government not to privatise profit-making PSUs.

Scores of other PSUs that were lined up for strategic sales escaped privatisation simply because the NDA, surprisingly, lost in the May 2004 elections.

And, disinvestment has never been the same again — either during the ten-year rule of the United Progressive Alliance (UPA) government, headed by Manmohan Singh, or the present NDA government, led by Narendra Modi. Both have been cautious on treading the privatisation path strode by Vajpayee, who managed to keep his detractors at bay.

 

Published on August 16, 2018
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