The public sector and privatisation in India by Sheela Dubey
That the lack of political muscle in the Lok Sabha leads to a weakening of the resolve for privatisation and liberalisation is a well-known axiom. It is currently playing out in North Block after the BJP came back to power in 2024 without a clear majority of its own. In 2021, the BJP, with 303 seats, could ignore its overt allies, and announced a blockbuster of a public sector privatisation policy called ‘Strategic Disinvestment Policy (SDP) 2021’.
Former NITI Aayog vice-chairman Arvind Panagariya hoisted SDP 2021 a few rungs above the pathbreaking New Industrial Policy of 1991, describing it as the final step towards rescuing the economy from the clutches of socialism. Sheela Dubey, in the preface, that precedes a tour de force of the public sector’s unique evolution in India, too, feels that the SDP is a “watershed moment”.
The SDP was radical to the extreme. But since its unveiling, Air India has been the only substantial disinvestment so far. Dubey, as also the captains of industry, had not accounted for the BJP’s loss of majority in 2024 and its critical dependence on allies. It was thus that Union Home Minister Amit Shah sang a different tune last month when he announced that the Centre would fork out Rs 11,000 crore for the Visakhapatnam Steel Plant.
Obviously, Chandrababu Naidu, having reclaimed the Andhra CM’s chair after enduring near political oblivion for five years, would not want charges of job losses to taint his fledgling tenure. Since then, unrefuted reports have suggested that nine more PSUs may also be taken off the privatisation roster. But the worm may well turn in future.
As Dubey points out, after two bursts of gargantuan public sector growth during the Nehru and Indira Gandhi eras — both with radically different reasons, it is largely accepted that the rationale for its existence is severely diluted and it is largely characterised by low productivity and a high-cost structure. In the outside world, too, Keynes and his theory of government management of the economy have been conclusively sideswiped by advocates of classical liberalism and the market economy, who hold the public sector as a burden to be cast off quickly.
Dubey pursues a narrative that is linear in trajectory, beginning from when the intention was to set up PSUs in backward districts in six basic industries, besides arms and ammunition, atomic energy and railway transport. Interspersed are little-known aspects, as also ones that have dulled from memory — Feroze Gandhi’s expose of corruption that triggered the nationalisation of the insurance sector; Nehru was not a doctrinaire advocate of nationalisation; Lal Bahadur Shastri broke from the Nehruvian line of thinking but his tenure was all too brief; and, Indira Gandhi in her last tenure and having broken ties with the CPI, was viewing her headlong nationalisation with regret.
By the mid-’90s, even the Left accepted that the love for the public sector was passe. Despite two Cabinet ministers from the CPI in the Central Government and a bigger block of CPI (M) MPs providing outside support, the United Front Government set up a Disinvestment Commission which would have done more but for the Asian financial crises. A pot of gold — Rs 3.5 lakh crore — would accrue to any government which fully pursues SDP 2021. However, Dubey elucidates in depth the complexities in procedures and perception that have led the Modi government to also tread lightly.
— The writer is a senior journalist