A  R  T  I  C  L  E

 

DISINVESTMENT : A  PROCESS  OF  SELLING  OF  NATION

 

YET GOVERNMENT OF INDIA HAS EARNED RS.8569.8 CRORE THROUGH DISINVESMENT PROCESS. THE SAID AMOUNT MUST BE DEPOSITED IN NATIONAL SAVING CERTIFICATE FUND FOR NATIONAL BENEFITS.

 

Mrs. Dr. Jyoti Singh,

Chairman, Dr.L.N. Sinha international

Institute of Economic Growth, MIG-66,

1st Floor, Hanuman Nagar, Kankarbagh, Patna: 800020.

E-mail: jyoti_singh74@indiatimes.com / rediff.com .

PH: 0612-397209.           Friday, September 27, 2002

 

Any country of the world has adopted the economic liberalization policy or open policy or foreign investment for their country benefits. This process has not been adopted by any country of the world for its national losses.

 

Our country 380odd Central Govt. Public Sectors Units (PSUs) had a combined net worth of Rs. 3,45,790.00 crore. The combined income of all these 380 odd PSUs, including the listed as well as unlisted units, was a staggering Rs.6,28,600.00 crore for the year 2001. The total dividend payout was more than Rs. 10000.00 crore. If we consider the top 20 profits making PSUs i.e. Rs.25998.00 crore, top 20 losses making PSUs i.e. Rs.49464.00 and top 20 dividends paying PSUs i.e. Rs.7651.00 crore and disinvestment of 37 PSUs i.e. Rs.8569.8 crore.  We can see it at a glance, which is mention below. Then the figure reveals that Central government has been managing badly on economic reform affairs and it reflects dark future of our nation.

 

There is a simple concept of economic liberalization in regards to Public Sector Units (PSU) that loss-making PSU will be dis-invested to private sector companies for better management, rehabilitation of the project and starting up production function. For this process, it is required to share up best technology of the world in that field of production by foreign investment and business tycoons.

 

It is tedious and tough task for our bureaucrats and minister of the affairs. But they do not seem to want to take help to the highest economists of the country to solve out the problem because of their vested interest.

 

A bureaucrat could not be supposed to policy maker of economic affairs. Unfortunately bureaucrats are the policy maker and implementers both in our country. So they are making a policy for their loaves and fishes. They are supposed to have little knowledge in the field of economic affairs of the country and world too. They are administrators. They are implementing the policy of the country in different field of working. They have no time to study about the world economic affairs and country economy affairs too, like a great economist of India and world. Only the economists are investing their 16 hours time for study, teaching, learning, research work and sharing of ideas through discussions at various level. The great economist of the country Prof. Dr. P. R. Bhahmanand, e-mail: vani@blr.vsnl.net.in , has been ignored by the central govt. for making up the economic policy of the country. It is unfortunate for the nation.

 

Only the great economist of the India will ascertain and determine about the policy of Govt. for the larger interest of the country with consultation of people and politician both. The fact is that economists of India, are ignored by the govt. but ministers and bureaucrats, have vested interest and can not solve the problem in the interest of the national economy. So, they manage economists to support their dialogues and ideas in front of general people through T.V. Channels, seminars etc. They are sponsoring those economists only at some level.

 

In the above circumstances, ministers and bureaucrats have been tied up themselves for their personal benefits and hence disinvestment of profit making PSUs of the country has been started by them. It is easy to sell and get personal benefits from foreign investor or Indian too. But in the case of loss making PSUs, it is not possible to get those advantages.

 

            If, we look close view of dis-investment process. Then we find that the year 2000-01, the government was able to raise a sum of Rs.1978.1 ( Economic Times Rs.1,873.00) crore from the disinvestment process. In the year 2001-02, it raised up to Rs.3401.2 (ET: Rs.3436.00) crore and in the half year of 2002-03, the collection has already reached Rs.3190.00 crore. The total sum of above disinvested amount collection isRs.8569.8 (E.T. Rs.8499.00) crore in two and half year.

 

The NDA govt. has sold out NATIONAL WEALTH by disinvestment process, which has been earned by previous govt. in many years for larger interest of people and nation too. NATIONAL WEALTH Rs.8569.8 (ET Rs. 8499.00) crore, will must be invested in NATIONAL SAVING CERTIFICATE or in construction of dam, hydroelectricity and irrigation for rural development, generation of approx. 70% employment in agricultural field, saving of diesel and electricity for irrigation purposes and earning of national revenues. It could not be miss-utilized by the govt. to take it as a part of GDP. It is also unfortunate for the nation that amount Rs.8569.8 crore is included in GDP and it is utilized for administrative and other non-productive expenses.

 

 

Let us look now to Central Govt. PSUs Completed Deals

 

Period

Company

Bidder

Total Amount

Jan' 00

Modern Food Inds(India)

Hindustan Lever

105.4

Jan' 00

Lagan Jute Machinery Co.

Murlidhar Ratanlal Exports

4

Feb' 01

Bharat Aluminium Co.

Sterlite Industries

551.5

Mar' 01

Kochi Refineries

Bharat Prtroleum Corp

659.1

Mar' 01

Chennai Petroleum Corp.

Indian Oil Corp

509.3

Mar' 01

Bongaingaon Refinery

Indian Oil Corp

148.8 1978.1

Oct' 01

CMC

Tata Sons

152

Oct' 01

HTL

Himachal Futuristic Comm

55

Nov' 01

Hotel Ashok, Bangalore

Bharat Hotels

4.1

Nov' 01

Hotel Ashok, Madurai

Sanghuchakra Hotels

5.5

Nov' 01

Hotel Ashok, Bodh Gaya

Lotus Nikko Hotels

2

Nov' 01

Hotel Ashok, Hassan

Malnad Hotel & Resorts

2.5

Nov' 01

Temple Bay Ashok Beach Resort

GR Thanga Maligai

6.8

Nov' 01

Hotel Ashok, Agra

Mohan Singh

3.9

Nov' 01

Juhu Centaur Hotel

Tulip Hospitality Services

153

Nov' 01

Rajgir Property of

Impac Travels India

6.5

 

Hotel Corp of India

 

 

Jan' 02

Hotel Qutab

Sushil Gupta

35.7

Jan' 02

Hotel Lodhi

Silverlink Holdings

76.2

Jan' 02

Hotel Laxmi Vilas

Bharat Hotels

7.5

Feb' 02

Hotel Centaur, Mumbai

AL Bratra Group

83

Feb' 02

VSNL

Pantone Finevest (Tata Group)

1439.2

Feb' 02

IBP Co

Indian Oil Corp

1153.7

Feb' 02

Jessop & Co

Ruia Cotex

18.2

Feb' 02

Paradeep Phosphates

Zuari Maroc

151.7

Feb' 02

Modern Food Inds. (India)

Hindustan Lever

44.7     3401.2

Apr' 02

Hindustatn Zinc

Sterlte Group

445

May' 02

Indian Petrochemicals Corp

Reliance petoinvestments

1490.8

May' 02

Maruti Udyog

Suzuki Motor Co.

1000

May' 02

Kovalam Ashok Beach Resort

M Far Hotels

43.7

May' 02

Hotel Manali Ashok

Auto Impex

4

May' 02

Hotel Aurangabad Ashok

Loksangam Hotels & Resorts

17.4

May' 02

Hotel Airport Ashok, Kolkata

Bright Enterprises

20

Jul' 02

Hotel Khajuraho Ashok

Bharat Hotels

2.2

Jul' 02

Hotel Vanarasi Ashok

Consortium of Ramnath hotels (p)

9.1

 

 

 

 

Jul' 02

Hotel Kanishka

Nehru Palace Hotels

96

Jul' 02

Hotel Indraprastha

Moral Trading & Investment

45

Jul' 02

Chandigarh Project

Taj GVK Hotels & Resorts

17.3   3190.5

 

 

Rs. Crore

8569.8

 

 

 

Above all PSUs have self-identities and it is an apex body of govt. of India. There were chairmen cum managing director, who are looking day today problem and they are responsible for all acts. We suggest central govt. that under the economic liberalization policy, the government should work on the theory of Revenue v/s payment of salary of employee. It means that earning of individual PSU, should distribute among their employees salary in the proportionate ratio from top to bottom. If they are not able to earn equivalent to their salaries then their salaries should held up or cut in proportionate ratio. Central govt. should not be responsible for the misdeed of employees and liable to pay their salaries from public money. In this way central govt. should fix responsibility on each and every employee of an organization i.e. PSUs.   We also suggest that Central govt. will give more liberty of their PSUs to act free and fare for national interest and profit making. Only these terms and conditions should impose under economic liberalization in our country for the larger interest of the nation.

 

Revenue v/s payment of salary of employee is only the norms in private sector industries. They always calculate salaries and expenses on their employees in the term of revenue earning. If any employee or branch office of their organization is not able to earn minimum revenue which has expend on them then the company sack or terminate their employee and close the branch. In the same manner central govt. should deal with their all PSUs and after then disinvest that PSU for private sector.

 

 

Any way the principle of economic liberalization has not adopted for the national losses and where it is mention that under the economic liberalization, PSUs are essential to disinvest. Central Government should not act on the suggestion of American Government that all PSUs will disinvest for private sector and foreign buyers. It is a conspiracy against our nation. Foreign investors do not want to invest huge capital in any industry in India. They want to earn more in respect of their investment. It is only the safe passes that they will get all infrastructures without investing any time and getting more and more benefits through profit making PSUs. It is only the way that they will invest less capital and they will earn more money on the national cost. Under the economic liberalization every business organization should have right to work and get benefits either it is public sector or private sector. Than why government is rigid to disinvest of profit making PSUs.

 

           

Let us consider the top 20 profits making Central Govt. PSUs, Losses making and dividends paying units at a glance, which is as follows:

 

Central Govt. PSUs Top 20 By Profits

 

Sl. No.

Company

 

 

Total Amount Rs.

 

1

ONGC

 

 

5229

 

 

2

NTPC

 

 

3734

 

 

3

Indian Oil

 

 

2720

 

 

4

SBI

 

 

1604

 

 

5

MTNL

 

 

1557

 

 

6

NABARD

 

 

1310

 

7

GAIL

 

 

1126

 

 

8

HPCL

 

 

1088

 

 

9

Nuclear Power Corp

 

      825

 

 

10

BPCL

 

 

820

 

 

11

Power Grid Corp

 

742

 

 

12

Neyveli Lignite

 

726

 

 

13

Northern Coalfield

 

703

 

 

14

IDBI

 

 

691

 

 

15

Nalco

 

 

656

 

 

16

Power Finance Corp

 

604

 

 

17

SIDBI

 

 

477

 

 

18

Oil India

 

 

467

 

 

19

PNB

 

 

464

 

 

20

ICICI (Merged)

 

      455

 

 

 

Data for the year end 200-01

Rs.  crore

25998 

 

 

 

Central Govt. PSUs Top 20 By Accumulated Losses

 

 

Sl. No.

Company

 

 

 

Total AmountRs.

 

1

Fertiliser Corp

 

 

6853

 

 

2

Hindustan Fertiliser Corp

 

6150

 

 

3

Rashtriya Ispat Nigam

 

4907

 

 

4

Bharat Coking Coal

 

 

4066

 

 

5

Indian Bank

 

 

3883

 

 

6

Eastern Coalfiekds

 

 

3846

 

 

7

National Jute Mfg.

 

 

2763

 

 

8

Indian Drugs & Pharma

 

1675

 

 

9

Hindustan Photofilms

 

 

1475

 

 

10

National Textile Corp(Mah North)

 

1430

 

 

11

Cement Corp of India

 

 

1422

 

 

12

United Bank of India

 

 

1359

 

 

13

Heavy Engineering Corp

 

1342

 

 

14

Konkan Railway Corp

 

 

1302

 

 

15

Mining & Allied Machinery Corp

 

1285

 

 

16

National Textile Corp (south Mah)

1271

 

17

National Textile Corp(WB,Ass,Orr)

1166

 

18

National Textile Corp(UP)

 

1158

 

 

19

Hindustan Shipyard

 

 

1090

 

 

20

National Textile Corp(Gujarat)

 

1021

 

 

 

 

 

 

 

Rs. Crore

 

49464

 

 

Central Govt. PSUs Top 20 By Dividend Payout

 

 

Sl. No.

Company

 

 

Total AmountRs.

1

ONGC

 

 

1729

 

 

2

NTPC

 

 

823

 

 

3

Indian Oil

 

 

815

 

 

4

ICICI (Merged)

 

494

 

5

HPCL

 

 

374

 

 

6

GAIL

 

 

373

 

 

7

IDBI

 

 

355

 

 

8

Northern Coalfield

 

337

 

9

MTNL

 

 

312

 

 

10

SBI

 

 

290

 

 

11

Nalco

 

 

284

 

 

12

BPCL

 

 

248

 

 

13

Neyveli Lignite

 

191

 

14

Mahanadi Coalfields

 

188

 

15

Nuclear Power Corp

 

180

 

16

Power Finance Corp

 

165

 

17

Oil India

 

 

157

 

 

18

Bank of Baroda

 

130

 

19

Bank of India

 

106

 

20

Coal India

 

 

100

 

 

 

Rs. crore 

 

 

7651

 

 

 

We find that the top 20 profits making PSUs show Rs.25998.00 crore of profit, top 20 losses making PSUs show Rs.49464.00 crore of losses and top 20 dividends paying PSUs show Rs.7651.00 crore of dividend. (Source of data Economic Times, Kolkata dated 16.09.2002.)

 

We have no objection to disinvest the losses making Central Govt. Public Sector Units for its revival and generation of employment. But we have objection that the profit making Central Govt. PSUs will not be disinvested further. Central Govt. should not caricature the activities of Developed Country like America. In the first phase of economy liberalization, American giant industries collapsed or applied for bankruptcy. It is one situation of management of the world greatest country. What will happen to our country?

 

Therefore, Profit making PSUs should not disinvest in future. It is selling out of the nation. When will central govt. amend it than before the disinvestment of profits making industries, Central Govt. should promise the people of Nation, MLAs, M.Ps., state governments that they will be able to generate such profits (i.e. Rs.10,000.00 Crore) through their own resources every year without any Tax burden being imposed on the people of country in future. Also the total earned amount through disinvestment i.e. Rs. 8569.8 crore will be deposited in NATIONAL SAVING CERTIFICATE for larger interest of nation and people both or such schemes i.e. construction of dam, hydroelectricity and irrigation for rural and national development work as well as generation of employment and revenue.

Now central govt. is engaged in extortion of money from the people by imposing various taxes systems. Among those, service tax system is a black tax system, which is spreading day by day in various field of working. The central govt. is not working for the sound economy and employment generation of the people in the country in real sense. It is one of the abysmal conditions of the nation. They did not heed our suggestion for larger interest of the nation and people both. They have not implemented or discussed on the Lashminarayan model to combat global market recession e.i. (Prof. Lakshminarayan Sinha had a perception of such crisis would prevail in the global economy in near future and so he warned the captains of world economy not to give undue emphasis on faulty model of Keynes to fight out the ill-effects of depression when he says, ‘the decisions to consume and the decisions to invest between them determine incomes (General Theory, P.64)’. Otherwise, According to Dr. Sinha, this mistake is obvious in terms of his own analytical system because he failed to go deep into the cause of deficient investment and resultant deficiency in effective demand. To explain collapse of MEC in terms of market sentiments and to prescribe its revival by doses of public investment is to depend too much on elements of irrationality. There is no denying that introduction into the received analytical system of uncertainties, which bedevil anticipations, was the other great contribution be made. Profit is an outcome risk-taking and uncertainly bearing. But Keynes could not, however, succeed in developing any weapon to tackle uncertainties and without which the development of theory of profit only by income multiplying effect in the short run is lop-sided and his doctrine can’t be claimed as scientific, if it is not raised above stock market gossip. In this way, Dr. Sinha has criticized the profit theory of Keynes and he has introduced an effective model to combat the problem of world’s recession based on the philosophy of Dynamic Theory of Capital. ),

Lashminarayan model on generation of employment which is superior than Pigou and Keynes e.i. (Prof. Sinha is an antagonist of Keynesian philosophy of employment and has criticized Keynes that his theory is not applicable in a developing country because the increment in aggregate demand function in that country is a hard task to stimulate it through the channelization of forces of investment. Thus, according to him, ‘employment is determined by supply of and demand for capital. The extent supply of capital determines employment capacity of an economy. Demand for capital derived from size and composition of terminal output and technology chosen for it, determines the extent to which the existing employment capacity is put to use and new employment capacity is being created (Value and Growth, 1974, P.156)’. To support his viewpoint he has developed a model of wage-profit relation. r =  Rn√ 1 – w   which shows the suitability of classical dictum. He calculated that ‘a fall in the wage rate would raise the rate of profit. If it be so, the rate of investment rises, effective demand increases and the volume of employment expands. Is there any reason why the rate of profit would not rise as a result of a fall in the wage rate? If the value of R (Standard Ratio) is reduced as a consequence of a fall in wage, the rate of profit may not rise. It may remain constant or it may fall according as the value of R is reduced less or more substantially. It is the demand-determined value of R, which is relevant in this context. He searched out that the fall in the value of R is caused by reduction in net output ( 1bid.P.157 ). He establishes a positive relationship between possibilities of creation of employment and the technology applied. It is more important for a developing economy than a developed one. ‘Rise in efficiency is urgent so that net out put per worker exceeds substantially the wage rate, which is low.

The capital labour ratio  [  KP / L   ] in the investment function must rise. Once the right technology is chosen, the stock of capital goods must expand to absorb all the labour available. Rising rate of investment expands aggregate supply. Careful investment planning is required to see that every increase in aggregate demand is matched by corresponding expansion of aggregate supply, both income and capital multiplying effects of investment proceed evenly at each stage of development (1bid)’.

His model of employment generation is more superior than J.M. Keynes as well as A.C. Pigou.) Kindly look on website: www.biharonline.com/lnmodel   .

 

Central Govt. will adopt the theory of Revenue v/s Payment of Salary to its all dept. employees including Railways. Economic computations of govt. enterprises are essential either present condition or before disinvestment.