- The three Agri-Laws repeal announcement of the Prime Minister is not only unexpected after having withstood the pressure exerted by the farm unions over the last several months but also severely dents the carefully built narration of the Union dispensation being decisive and action-oriented. Having taken a hit of sorts on that narrative, the Modi-led government should not allow the shifting of focus from the task at hand vis-à-vis privatization and disinvestment of several loss-making public sector entities. The foremost amongst these are some of the public sector banks. For the uninitiated, among a bunch of bills that will be introduced in the ensuing winter session of Parliament is one that will facilitate the privatization of public sector banks.
PC: Surabhi Shaurya
- Note that the Banking Laws (Amendment) Bill, 2021, will propose changes in relevant legislation that governs the functioning of PSBs to facilitate the transfer of ownership. If you recollect, the Union Finance Minister had indicated in the Budget that two PSBs are due for privatization this financial year. And from the financial sector, a general insurer was also slated for privatization. Going back, in the last session of Parliament, the Government of India had mentioned that privatization was an ongoing process in the case of 21 PSUs. As you are aware, the stated exercise was completed in the case of one of them, Air India.
- Remember, this was no less than a pivotal moment in terms of signaling real intent as the airline was bleeding perpetually for decades. Of course, the loss-making airline, burdened by debt and staffed by a unionized workforce, was perhaps the toughest to privatize. With Air India out of the way, it should be relatively easier to deal with others. Some of the prominent among the remaining 20 PSUs are Bharat Petroleum Corporation Limited (BPCL), Shipping Corporation, and Bharat Earth Movers Limited (BEML), respectively. Needless to mention, the Union Government needs to keep the momentum going by completing the exercise as soon as possible.
- Once the policy inertia sets in wittingly or unwittingly, it becomes well nigh impossible to push ahead as past experiences suggest. Subsequently, catching up on the matter would be an uphill task. Indisputably, one of the highlights of the present dispensation at the Centre is its approach to economic reforms with an unambiguous stand on privatization. It makes imminent sense to see more of that because privatization is essential to redeploy public resources in areas such as education, and most importantly, healthcare which demands a massive infusion of funds to face up to Covid like pandemic crises in the future.
- Further, it also helps the economy as PSUs get the benefit of additional capital and a clear-headed approach to business. Additionally, PSU staff will be beneficiaries of it as well. Note that privatizing two banks will need the perseverance and pragmatism displayed earlier because PSBs have borne the brunt of the Non-Performing Assets (NPA) problem for a long time. Also, prospective stakeholders should receive an encouraging message that the reformist spirit is very much alive despite farm laws repeal. The nation expects positive and decisive action on this front.