As Modi returns to power with thumping majority in 2019, a group of Ministers have been empowered to proceed with fast pace disinvestment of various public sector units like Oil and Natural Gas Commission (ONGC), Indian Oil Corporation (IOC), Gas Authority of India Limited (GAIL), National Hydroelectric Power Corporation (NHPC), National Thermal Power Corporation (NTPC), Coal India Limited (CIL), Bharat Heavy Electricals Limited (BHEL) speech the Finance Minister Nirmala Sitaraman announced that the government will look to reduce direct controlling stakes in some of the state runs firms by bringing down its holding below 51% level, the minimum holding required for an entity to qualify as central public sector enterprise.

PM Modi’s administration already sold government stakes in a host of companies to raise a record Rs 2.82 lakh crore in his first five years term, nearly three times the divestment proceeds of nearly Rs 1 lakh crore achieved by the Congress party led government during 2009-14. The government further plans to raise Rs 3.25 lakh crore over the next five years by bringing down its stakes to 40% in some cases, to meet its fiscal deficit. In future government is likely to reduce its shareholding to 26%.

The government holding in IOC was 82% in 2006, 68.57% before Modi’s ascension to power in 2014 which now stands at merely 52.18% in 2019. Curiously Indian Oil has entered into a joint venture with Adani Gas Ltd. to form Indian Oil Adani Gas Ltd. Most of the contracts for City Gas Distribution have gone to either Adani Gas alone or its joint venture with Indian Oil.

Adani group has emerged as the largest private sector CGD player in the country. State-owned IOC and GAIL have signed 20 years offtake agreement with highly indebted Adani group for 3 million tonnes per annum and 1.5 mtpa, respectively, to promote Liquified Natural Gas terminal at Dhamra in Odisha.

In 2013 Adani group had 44 projects in India in the areas of CGD, coal mining, agri commodities, logistics, thermal power, power distribution, solar energy and ship fuelling. By 2018 it had further consolidated in these areas and expanded to new areas of airport management, wastewater treatment and defence to take up its projects to 92 in addition to its overseas operations. Its total debts stand at about Rs 1 lakh crore, among the highest of Indian conglomerates.

While Adani has been the preferred partner in profitable ventures of the PSUs, they are made to bear the brunt of populist schemes like the PM Ujjawala Yojana which don’t guarantee profit. According to Dharmendra Pradhan, Minister for Petroleum and Natural Gas, the refill rate of Liquified Petroleum Gas cylinders distributed under Ujjwala was only 21.16% where refill is defined as even taking one cylinder in a year.

Normally, 7-8 cylinders are required in a household annually. The loss was borne by the dealers who gave the first cylinder free along with the stove and then were supposed to recover their cost from the second cylinder onwards.

Modi doesn’t leave any occasion to criticise the Congress party leaders, present and past. Especially on target is Jawaharlal Nehru. While one may disagree with the economic policies of Nehru government, the fact is that the BJP government is essentially making money by selling assets which were created by the first independent government of India or were a creation of extension of the policies for strong public sector.

The irony is Modi is able to camouflage this sale of national assets, subsumed under his politics of nationalism leaving critics within or without his party nonplussed.

Another example of how private companies are being blatantly promoted is how a new entrant in field of communications Reliance Jio was given the facility of 4G spectrum whereas Bharat Sanchar Nigam Limited was denied this and using the 70,000 towers of BSNL, Jio, a company personally promoted by the PM, has begun dominating it in the market. 
 

If defence sector is opened up for corporatisation-privatisation what will prevent it from being dominated by oligopolistic market economics?

The post How would Modi justify nation’s security being ‘mortgaged’ to private companies? appeared first on SabrangIndia.