DNA Edit: Disinvestment woes – Centre can do without objections from within

The Modi government’s largely successful disinvestment programme appears to be running into roadblocks. The opposition is not coming from rival political parties – still recovering from the sucker punch received in the elections – but from inside forces. The economic wing of the Rashtriya Swayamsevak Sangh (RSS), Swadeshi Jagran Manch (SJM), has appealed to the BJP-led NDA government to reconsider its recent proposal of disinvestment of 92 central public sector enterprises (CPSEs), as suggested by NITI Aayog. The influential SJM has gone so far as to pass a resolution requesting the government to not go ahead with its plan to disinvest these strategically important CPSEs, including the subsidiaries of Air India. 

Instead, the SJM wants the government to support these enterprises. If ‘support’ for the CPSEs constitute what has been done to bail out Air India, then it would defeat the very purpose of privatisation. Disinvestment-bound Air India, for instance, has sought the government’s approval to borrow Rs 2,400 crore from National Small Savings Fund (NSSF), a pool of small savings from households, to meet its working capital requirements. The airline has seen its total debt ballooning to Rs 58,000 crore and is basically afloat, thanks to government largesse. At present, there are eight Maharatna, 16 Navratna, 75 Miniratna CPSEs and 52 loss-making CPSEs. Instead, the SJM has suggested to not resort to the strategic sale route for disinvestment, but adopt minority disinvestment through capital market approach, which ensures that national wealth remains within India and control of national resources stays in the hands of the government. 

The SJM has raised objections against the proposed disinvestment of Air India’s three wholly-owned subsidiaries, Air India Air Transport Services Ltd (AIATSL), Air India Engineering Services Ltd (AIESL) and Alliance Air Services Ltd (AASL). The Modi government’s disinvestment process has so far been running on sound lines. In the fiscal year 2018-19, the government for the second time in a row, exceeded the disinvestment target by collecting Rs 85,000 crore as against the budget estimate of Rs 80,000 crore. Similarly, in 2017-18, the government had mopped up a record of over Rs 1 lakh crore, against the target of Rs 72,500 crore. During the current financial year, the share sale through the exchange traded funds (ETFs) has garnered the highest amount of Rs 45,729 crore, followed by Rs 14,500 crore acquired through government’s 52.63 per cent stake in the Rural Electrification Corporation (REC) by state-owned Power Finance Corporation (PFC). 

The government has also received Rs 1,929 crore through an initial public offering (IPO) of five companies, namely, MSTC, RITES, Ircon, Garden Reach Shipbuilders and Midhani. It has collected Rs 5,218 crore from the offer for sale (OFS) of Coal India, and another Rs 5,379 crore from sale of SUUTI stake in Axis Bank. Moreover, the companies, which helped the government gather over Rs 10,600 crore through buybacks include, ONGC, IOC, Coal India, Oil India and NLC. Keeping these accomplishments in mind, the government has set a disinvestment target of Rs 90,000 crore for the next fiscal year. With many objections, it is anyone’s guess if they will reach their target.