The decision of the Union Government to recapitalise Public Sector Banks has again brought the sensitivity of disinvestment to the forefront. We need a more innovative & participatory approach in dealing with Public Assets Management
Madan Diwan
The decision to recapitalise Public Sector Banks surprised the World. Communists and Opposition Unions were shell shocked. Opportunity of creating further discontent in society was lost.
Public Asset Management is really challenging and tricky. For all the buzz that Dr Manmohan Singh creates about his Economic Wisdom, the figures speak contrary about his abilities to carry massive Disinvestment. The reforms with Human Face did not alter too many things on Indian Economic Landscape. The growth trajectory
created by Atal Behari Vajpayee-led NDA narrowed since UPA I and II let the economy on auto pilot. The UPA could not muster support of his allies like Mamata Banerjee for large scale disinvestment and was unable to invest in most required public assets like roads, rails, ports and essential infrastructure. His record of maintaining autonomy in Public Sector banks is dismal as more records are tumbling in Public Domain about regular interference by certain Babus and leaders.
Criterion for disinvestment decided by NITI Aayog for NDA II may need a relook. PM Modi believes in total autonomy in decision making process, but whether Babus follow his path of out of box thinking is a matter of
deliberation. Among many other things, evaluation of PSUs on parameters like role in serving National Security Interest, discharging sovereign functions, serving general public welfare is welcome. However, process of consultation needs to be enlarged.
Through media, the image has been created as if the nationalist labour organisations like the Bharatiya Mazdoor Sangh (BMS) and some affiliates are blatantly opposed to disinvestment and privatisation. This is a total myth. There are several names that are not even heard, which, for too long have been bleeding public exchequer. These should be privatised forthwith. Dr Manmohan Singh could not have even thought of privatising such units in view of their locations and interests of state leaderships. Other units that have always been making losses need a critical examination beyond scripted parameters.
After all one set of leadership created these units, another set killed them. Opening up of Economy, should have been actually supported by improving all round performance of these ailing public sector undertakings. Any shrewd business group attempts to improve prospect of his weak businesses before actually selling of these units. Governments having invested in such units need to follow this strategy. Narendra Modi while serving as Gujarat Chief Minister had exemplified this by putting few State owned units to the path of exceptional growth and superb performance, which should be carefully studied.
Critical illness of Baa: Kasturba Gandhi and shortage of new generation medicines led to the foundation of Hindustan Antibiotics Limited. Till today the PSU continues to serve the nation by manufacturing medicines required for Army for use in high altitude areas like Siachin. Farmers can afford to buy insecticides made by this unit as compared to the private competition. It has state of the art WHO approved GMP manufacturing units. What more public welfare the PSU should serve! Rest of Bharat is looking for wage revision to suit 2018 inflation; on the contrary cost of employees here is abysmally low. Then why privatise? Certain sections with vested interests in the land, never supported the unit to achieve its scale for past several decades. NDA-I had roped in world’s largest pharma company to improve competitiveness. However, subsequent litigations have continued unabated. Babus, who should have first, attempted to bring down curtains on these litigations, are the ones pushing for closure and sale. Effort to settle outstanding litigation between Government of India (GoI) as owner and a foreign company would certainly further improve rating of ease of doing business. This settlement will also draw international investors having deep pockets with confidence, that GoI is serious on effective management of Public Assets. This approach is missing and therefore we are not able to improve realisable value of Hindustan Antibiotics.
China’s hegemony in antibiotics is well known fact. In a war-like condition if Chinese erect massive trade barrier to restrict supply of Penicillin-G, what will our country do? A global study of prices of pharma products in war torn
countries suggests that, you have to pay extra ordinary high price. Jihad battered world is looking for medicines at reasonable cost. PSUs like Hindustan Antibiotics will serve as sovereign and assist the suffering population with cheaper medicines. JANAUSHADHI Yojana too could benefit from reliable long term pricing contracts with PSUs. Is evaluation criterion of sector specific work enough to decide fate of units such as IDPL and HAL? A wider consultation with stakeholders can throw light on reasons and circumstances of sickness and several alternatives will emerge for realising more value to the exchequer without altering its status.
Case of Bridge & Roof Co. (India) Ltd is a bit different. It is a consistently profit making dividend paying Mini Ratna company. In the past, this PSU has not sought any Government assistance. It has built iconic Howrah Bridge and has been at the forefront in building bridges for decades. It has been engaged in undertaking various Government projects in Naxal infested areas. Additionally this company has performed work in hilly areas of North, East and difficult terrain like Ladakh. This is the only company whether in private or public sector, to have domain knowledge of Crude Oil Storages Construction and handling. A team of over 1500 well experienced engineers with additional extensive knowledge of Wagon Building, Heavy Structures Welding should not be put on sale just like that. The Secretaries could have considered listing of this company first and then divesting in stages. Had there been a dialogue with various stake holders, different scenario would have emerged to add value to GoI.
When one examines another PSU, STC; the different aspects emerge. The current in charge appointed during UPA tenure has shrunk the operations to unbelievable levels. Once on forefront representing sovereign, it has almost wound up from several international markets. A profit making desk like IRAN has been dismantled, its Gold Import Division in the hands of lesser known mortals, this PSU has been made sick. Various canards are spread about intentions of this Government, creating confusion in the minds of Corporates and families associated with this PSU. Who is creating this situation? Certainly not the Ministers and BJP. The iron frame of bureaucracy has to accept its responsibility of creating an atmosphere of dialogue within the system and with all stake holders.
An impression is created that BMS opposes all mergers in the Bank. It is conveniently forgotten that, for over three decades the demand for consolidation of RRBs has been
pending. The need for strong network of a bank to reach every individual in the last mile has been felt and followed up by BMS Unions. Need to have robust institution to finance agricultural credit needs still remains. Empty promises made to RYOTS and UPA Era
managements create obstacles in actual delivery. What organisations like BMS want is a well thought and thoroughly discussed process of Consolidation. If one were to go by chaos in several villages after merger of SBI and its associates and instant closure of branches; such expectations must be met.
Untested launching of Aadhaar Enabled Payment System (AEPS) by a certain Nationalised Bank actually led to selective leakages and management ensured arrest of several farmers without punishing its own officers who were actually responsible for such losses. Misuse of autonomy given to Boards by NDA-I Government is rampant. Two years ago I proposed Accountability Policy for Whole Time Directors of Public Sector Banks in the wake of mis-use of autonomy. A very senior officer called me for discussions. In few minutes he told me that time rationed for my meeting was over and I must wind up discussions. On an issue of national importance, with magnitude of several lakh of Crores in NPAs in public sector banking system can officials carry such view!! NPA crisis is created by failure of risk models adopted by various Whole Time Directors. Communist Unions target Modiji for NPAs in the system. But who is the real culprit? Almost all top Management posts in the last several decades have gone to persons who were not members of BMS Unions but other Unions. The Communist Cadres were present in every stage of decision making then why blame the present Government?
RRB units organised a rally in Delhi to remind about their long pending demands while wearing orange bands in place of normally seen black bands. During demonetisation these cadres in rural areas went out of the way to keep their customers happy despite heavy stifling by the Communist Unions and city centric bias in distribution of cash. Management of many large Natinalised Banks sent very old soiled notes to constituency of then MoS. RRB cadres were cornered by opposition. All of them persuaded accountholders and merchant establishments to bear for some time. The long winding queues, withstanding; no untoward incidents were reported. Heavy backlash by political parties at gates of most village branches, was handled with gentle care.
Case of 1900 battle ready Infantry Carrying vehicles Sarath (BMP2), the backbone of Indian Army, is even more curious. Produced under license from Russia at OFB Medak, these have been in service since 1985; and require major improvements including night vision capabilities. The upgrade plan has been in cold storage in UPA regime despite Russia willing to accept technology transfer for major modules. What has the Babudom done; in the wake of renewed threat from China? It has
proposed the FICV and Light Tank projects, under private sector management; which certainly will take many more years to come.
On one hand you have a full-fledged Public Sector Unit which is willing to continue to serve the country at all costs, and on the other you have Officers proposing total privatisation; even if it means job losses in security sensitive establishments. Who is accountable to losses in investments made in these Public Assets? Who will be accountable for losses of lives in eventuality of war, where under prepared army will face with most
modern weaponry? Many more such truths are buried under secret files of Government. To make Public Assets even more useful an open discussion and interaction at official levels, is the demand made by affiliates. The
damage caused to the Nation by unconstitutional National Advisory Council should not be forgotten. Closed door decisions must be preceded with open dialogue, to let fresh thoughts breeze through, wades of papers.
A few situations explained here are indicative that Secretaries and NITI Ayog need to apply their mind before suggesting drastic measures to Cabinet. Everyone is aware that, on one hand you have ruthless China with no labour policy in sight. On the other hand you have Japanese, who wish to give lifelong employment guarantee. Largest economy USA does not guarantee security in jobs; but it guarantees the social security net, where no one dies of hunger. Russia is yet another extreme economy nobody could fathom yet. Due to unstable oil prices and disturbances in Gulf region, service profiles and remuneration expectations in those economies are on downward slide. Challenges of World Trade are growing and there is no going back on
commitments already made. Everyone understands this reality. The protesting BMS cadres have always been practical in the past and have been instructed to be adoptive and practical i.e. vyawaharya. For one to create an impression that there is opposition in rank and file is absolutely wrong conclusion. Expectations, that every officer responsible for any decision gone wrong must be held accountable, are not misplaced. The organisations are only raising the bar for administration to perform better, listen carefully, decide transparently and make officials deliver on every promise their leader makes to the Nation.
(The writer is an economist and enterpreneur)
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