It’s move that has deja vu written all over it — it appears that the Centre has given up the idea of going ahead with any new disinvestment plans in FY24, in view of the upcoming general elections. The question that must be asked is: How should we take stock of public sector undertakings (PSUs) today — after not just three decades of liberalisation, but ever since Independence when they were placed at the ‘commanding heights of the economy’?

After the Avadi Congress of 1955 the Congress government decided to lead the industrialisation effort. It created a whole bunch of manufacturing units, from steel and oil to photo films to even bread. This investment was funded with public money. When that started to run out in the 1970s, it started nationalising private sector companies. So by the end of the 1980s India had over 300 PSUs. Barring a few, the rest became millstones around the fiscal neck, thanks to mismanagement. So in the 1990s, when the pressure to spend more on infrastructure, health and education increased, talk began of privatising them. By the end of the 1990s this talk had turned into a serious effort. But, as the evidence shows, nothing significant has happened. Most PSUs, save for prominent ones in sectors such as oil and gas, power and steel, are just junk. Even the employment they generated has shrunk, so much so the trade unions have lost interest. The only thing of value that’s left is the land on which they squat. But even this isn’t a lot, maybe 10,000 or so acres spread over 29 States — and even their value varies depending on location.

But the government can’t sell the land in most cases because the titles aren’t clear. This, in turn, is because the States, when asked to, simply allotted land to the Centre. So net-net, the government isn’t going to get much revenue even if it holds a garage sale. The revenue imperative has diminished almost entirely. That’s why the government must stop viewing privatisation as a revenue raising measure. It will get practically nothing in most cases.

The question, therefore, is what’s to be done now. After identifying the PSUs that have been on life support for more than 10 years, the Centre should close them down and return the lands to the States on the condition that these are used to build schools, colleges and hospitals. For this to be done all that is needed is a change of land use which can be done with a simple executive order. There are earlier instances of PSU land being transferred to private parties, which in turn has been used to build high-end residential and commercial properties. Indeed, most appallingly, in some States local politicians have simply stolen the land and sold bits and pieces as plots and flats. The Centre hasn’t been able to stop it. Instead of this sort of legal and illegal privatisation of the most valuable asset of a PSU in coma, education and health institutions should be built on the land. After all, as the saying goes, there’s more than one way to skin a cat.