DISINVESTMENT ISSUE

Corporate Media Runs Amok Bereft Of Facts & Figures

Dipankar Mukherjee

UNNERVED by the decision of the government to put the disinvestment proposals on hold, the corporate media launched a blitzkrieg campaign of falsehood and distortion to rundown the decision. Headlines like “Funds-block to social sector programmes”; “Exchequer to forgo Rs 8000 crore in capital receipts; “Prime Minister under siege”, etc, were splashed to create a ‘dooms-day’ scenario for social sector programmes because of the hold on disinvestments decisions. The expected revenue realisation on disinvestments as per the media ranged from Rs 2,500 crore to Rs 12,500 crore, and the shortfall of which, in their opinion, would have a big impact on social sector funding of education, health and even on National Rural Employment Guarantee Scheme.

ALL THE NOISE FOR Rs 1000 CRORE ONLY!

The government has proposed to create a National Investment Fund (NIF) with the proceeds of disinvestments of PSUs. As per the government, 75 per cent of the returns earned by the NIF would be spent on social sector programmes while the remaining 25 per cent would be spent on revival of viable sick PSUs. It is the returns, I repeat returns, and not the proceeds of disinvestment as it is, which was proposed to be used.

The sale of stake in the four PSUs viz Nalco, NLC, PFC and NMDC would have fetched the government Rs 12,000 crore as per the media. What is the return expected from Rs 12,000 crore? Not more than Rs 1200 crore. Out of that if 75 per cent is given for social sector programmes, it only comes to about Rs 1000 crore. The whole of the country is being lectured that if Rs 1000 crore is not realised, there would be a big roadblock for social sector programmes! As per union budget for 2006-07, the following is the allocation for some of these areas for example:

¨      Rs 11,700 crore for National Rural Employment Guarantee Scheme.

¨      Rs 8746 crore for Prarambhik Sikhsa Kosh from revenues through education cess. (Even 0.5 per cent increase in education cess would fetch the above amount)

¨      Rs 8207 crore for National Rural Health Mission

Nowhere in the budget has this allocation been linked with the availability of funds from disinvestments. As a matter of fact, disinvestment as a word is non-existent in the union budget, which is an authentic documentation of revenue and expenditure for the year 2006-2007. The budget showed a plan expenditure of Rs 1,72,728 crore and non-plan expenditure of Rs 3,91,263 crore. Then what is this hullabaloo about? Is Rs. 1000 crore such a big figure in a budget of more than Rs. 5 lakh crore?

NOT PRIVATISATION – REALLY?

“After all, it is only a sale of a small portion of shares. How does it matter?” argue the so-called reformers. The counter question would be “How is it that you are so much concerned about a thousand crore of rupees in a budgetary outlay of more than Rs 5 lakh crore?”. What is the corporate interest of FICCI, ASSOCHAM and others? Are they paying Rs 1000 crore to the government?”

Everyone understands that the real objective is to institutionalise the whole process of disinvestment by creating a fund, which will later, if not today because of the Left parties, be handed over to private fund managers for utilisation in stock markets. The “returns” to be used for social sector programmes is just a cover for the hidden agenda of privatisation.

If divestment of 5 to 10 per cent share is not a serious issue, then why – that too for a paltry amount of Rs 1000 crore – is the government being called upon to bulldoze the opposition of supporting parties and the allies and the employees of these companies who are the major stakeholders so far as these PSUs are concerned. Labour and capital make an industry. How can any sensible government ignore labour totally and be guided by corporate lobby which has no existing stake in these PSUs.

IS PUBLIC ENTERPRISE SURVEY A BANNED PUBLICATION?

Leave aside the huge tax arrears and NPAs, regarding which the Left parties have been raising repeatedly as an alternative source of resource mobilisation, did the corporate  media bother to have a look at the Public Enterprises Survey 2004-2005, published by the central government? What does it say?  As per the survey:

239 operating public sector units with Rs 98,313 crore equity from the government have registered a net profit of Rs 65,429 crore (including loss making units) and paid a dividend of Rs 20,730 crore for the year 2004-2005. The reserves and surplus of these units in the year ending March 31, 2005 is Rs 3,09,867 crore.

Let the corporate media tell a layman, if he has Rs 3 lakh in his bank, should he sell his assets for Rs 12,000 only to cater to his social obligations? Tell him under what justification out of Rs 20,000 crore dividend even Rs 1000 crore cannot be used for the funding of planned social sector programmes?

Against the reserves of more than Rs 3 lakh crore, the debt-equity ratio of these PSUs on an average is only 0.75:1, which clearly shows their tremendous potential to raise huge amount from debt markets. What is the rationale for those profit making PSUs having a potential to raise more than Rs 5 lakh crore from the market to go for disinvestments in capital market instead of going to debt market? Let the corporate media stop beating around the bush. Let them come out on behalf of their mentors that all the profit making PSUs with such huge reserves and profits are to be privatised so that private sector does not have to take any responsibility of creating new assets and get all the advantages of cherry picking through disinvestment or strategic sale as and when its suits them today or tomorrow. Today it will be disinvestment without privatisation so as to facilitate a strategic sale, privatisation tomorrow. 

A TALE OF TWO COMPANIES

If Rs 1000 crore becomes such a big national issue today then here is an immediate solution. M/s Reliance Industries Ltd. in its audited financial results for the year 2005-06 has declared a net profit of Rs 9906 crore claiming it as the highest in private sector. It has paid a dividend of Rs 1,394 crore at the rate of 100 per cent.  Oil and Natural Gas Corporation (ONGC), the navaratna PSU, in the same year has registered a net profit of Rs 14,439 crore notwithstanding highest ever subsidy payout of Rs 11,966 crore to the government and yet for the fiscal 2005-06 it declared a dividend at the rate of 450 per cent amounting to Rs 6,417 crore. Is it too much to expect that the government instead of taking 450 per cent dividend into its own kitty, keep the dividend at the rate of 300 per cent and pass on the remaining amount, which will be more than Rs 2000 crore, for social sector programmes. Any takers?

FACE THE REALITY

The fact is that apart from the Left, other parties like DMK, PMK, RJD, BJD, a section of Congress etc are all opposing disinvestment because they are convinced that more than policies, it is bad economics. The employees of Neyveli and Nalco with their own experience and knowledge about the industry are aware of it and that is why in spite of offers of higher allocation of shares they spurned the lure. The employees and the people of Tamilnadu and Orissa know that public assets are not to be frittered away just because some corporates and their paid pen pushers are desperately trying to grab them in the name of reforms. After all they are their ‘pride’, created out of their blood, sweat and land. They may be objects of ‘envy’ of the private corporates, both domestic and foreign. But should the ‘envy’ be translated to such a slanderous campaign bereft of all facts and figures? People would be giving a fitting reply in future also to such intellectual dishonesty.