It is an enduring myth that public sector enterprises (PSEs) are usually white elephants and this perception has constantly been exploited to drum up support for privatisation ever since the country took the economic liberalisation route in 1991. What many proponents of privatisation tend to forget is that these PSEs, along with public sector institutions such as the Railways, are guardians of national resources and belong to the public and their divestment only helps fatten the pockets of private players.
Data from the Department of Disinvestment under the Ministry of Finance showed that the 50 listed Cental PSEs had a market capitalisation of Rs.12,10,222 crore on the Bombay Stock Exchange (BSE) and Rs.12,07,217 crore on the National Stock Exchange (NSE) as of December 31, 2015, accounting for about 12 per cent of the total market capitalisation. Top among these PSEs were Coal India, followed by ONGC, NTPC and IOC, each of which had a market capitalisation of more than Rs. 1 lakh crore. Instead of strengthening the hands of such enterprises, the government is only seeking to undermine them by dilute its stake further. Such moves will only benefit private players at the expense of national assets. Incidentally, Coal India and ONGC also figured among the top 10 of all companies in terms of market capitalisation.
Among some 225 unlisted Central PSEs, more than 130 have been profitable, according to statistics available for the fiscal ended 2012-13. Hindustan Aeronautics was the top-ranking entity in this list, followed by companies such as Rashtriya Ispat Nigam, PEC and Nuclear Power Corp. According to the disinvestment policy, “unlisted CPSEs with no accumulated losses and having earned net profit in three preceding consecutive years are to be listed”. This poses a serious threat to several unlisted PSEs that perform well over a few years as their stake is diluted and the profits that currently go to government coffers entirely are significantly reduced, all for some quick gains in the short term.
So far, the government has mopped up Rs.1,71,703.97 crore through minority stake sales. The most significant divestments over the past 15 years, which also brought in the maximum proceeds, were in Coal India, ONGC and NTPC.
Going beyond economics, one must consider the social role that these PSEs play by generating employment and lifting millions of people out of poverty. Coal India alone employs some 3,60,000 people, 3,40,000 in permanent jobs and 20,000 on contract. However, it is the Railways that plays the most important role in generating employment among all public sector institutions. Unfortunately, this core objective has been diluted over the past two and a half decades. Its total strength of 16,54,985 employees in 1990-91 has steadily eroded over the years, culminating in 13,33,966 in 2013-14. The greatest reduction has been in group D employees, whose numbers fell from 7,18,281 in 1990-91 to just 1,28,992 in 2013-14. This worrying trend has also impacted the implementation of social justice in the Railways, where employment of members of the Scheduled Castes and Scheduled Tribes has posted insignificant growth in 20 years.