DISINVESTMENT OF PSU IN INDIA-A MESSIAH OR MASSACRE FOR INDIAN ECONOMY?
A Question which is going to hit the government soon because of financial crisis due to pandemic.
The sale of government shareholding in public sector units(PSUs) to private sector units is known as ‘disinvestment’ . Along with that if government hands over the management system control to private sector it is called Privatisation.
*Why disinvestment is better for indian economy
There are lot of reasons why a supporter of disinvestment policy will argue that major problems that afflicts the PSUs can be overcome if they are handed over to private sector. Some reason are
- Disinvestment first of all reduces political interference, which is one of major reason why many of PSU companies are not able flourish to their full potential .
- It will provide higher quality goods and product
- It will promote competitive efficiency.
- It will also provide better service (if you dont believe, then try to open a bank account in SBI,and other in some private bank you will understand the difference).
*Disinvestment over the years
Between 1991 and today, the Government has managed to divest its stake in few companies only. Several attempts to disinvest got enmeshed and submerged in controversies(like one which is happening with Air India).there was scathering criticism about the methodology, realisation(sale price), the procedure to restructure the unit before its shares are sold,the timing of disinvestment,the end use of sale proceeds,and even about the choice of PSU to be sold.
In total, after divesting its stake in several approximately 52-53 PSU (including a few subsidiaries)since 1991,the government realised 2.32 lakh crore.
*Then why government dont disinvestment more often
Many in our country thinks that disinvestment is not an option for India because-
- India will lose its self reliable status
- government will no longer a job provider (because of which the ruling party(ies)will see a huge cut in their vote bank because of this).
- Biggest reason-Corruption,money will not even reach the companies.
- Opposition will start questioning about reliability of government and will start linking the government with a particular industrialist or businessman.
*Current scenario and need of the hour
For those of you who dont know ,there were speculation going on to divest Air india in March of this year , but due to nationwide pandemic ,this discussions came to a halt.
The government was facing a lot of criticism for this speculation.why? Answer is simple.Air India’s debt, now about $8 billion, is growing unsustainably. It was bailed out with $5.8 billion of taxpayer money in 2012. The sale’s purpose should be to compensate taxpayers for shouldering the burden of keeping the national carrier afloat. Air India’s disinvestment could deliver this if it results in reduced government interference and increased competition. Remember, most taxpayers are also flyers.
In my opinion (a guy who dont know very much about government policies on divestment or controlling PSU) ,if our economy starts going to lump and recession starts looming in, then government should consider about privatization of some sectors which are going in huge loss, in this procedure transparency should be maintain,so that the public know that money which they are paying as tax are not going in wrong hands. Even if disinvestment will not solve our problems fully , but it will able to heal some wounds of our economy and can act as crutches to our limping economy in times of crisis.