The Modi government after trying all juggles has decided an initiate a privatization program. Under this program, the government will sell its entire stake in the second-largest state refiner- Bharat Petroleum Corp and the largest shipping company, Shipping Corp. of India Ltd. It has also declared to sell control on 30.8% shareholding in Container Corp which has almost monopoly on railway freight. Along with them, Air India will also be put on sale and the government would pay for the airline’s hefty debt to make a sale attractive.
It is assumed if the sale of BPCL, Air India, and Shipping Corporation went well; it will boost reforms and flag economy.
It’s not the first time that BPCL and Air India are on for sale. It happened at the time of government under Atal Bihari Vajpayee but failed.
Initially, Modi tried compensating the economy crisis by selling minority stakes in public companies which doesn’t prove beneficial in collecting 1.05 trillion rupees ($14.6 billion) as required to boost the reforms and flag economy. As an add-on, a failed attempt to privatize Air India showed the way to privatization targeting the asset disposal.
The equity market will also glad as a passing of a state asset in India is considered as small offers of listed government companies or transfers of one state-run firm to another which does not affect the economy productivity much.
The reasons for such privatization are clear. The economy is facing its worst crisis after the Modi government introduced the two horrendous acts –Demonetization and implementation of GST to catch hold of cheat money in India in which the honest sector also faced the consequences like mite grinds with wheat. This not only broke the backs of the common man but has also shaken India’s economy resulting in slow or negative growth of GDP.
Another reason why the situation of economic crisis occurred is the loopholes in the structure of the economy. In all, 32 % of the output of India’s public sector goes to taxpayers and banks that supply capital and the remaining 68% is enjoyed by privileged employees who get highly paid than the employees in the private sector.
To sprinkle salt on the burn, the Modi government spent thousands of crores on making statues, getting publicity, renovating the capital, etc. Bankruptcies in banks and unemployment made the situation worse creating a wall of insecurity amongst the people in India. The result of these investments as expected affected the economy’s loss unbearable. He’s even spent $6 billion on two unprofitable state-run telecommunications firms.
Last month the government slashed the corporate tax rates from 30 percent to 22 percent (plus surcharges), and 15 percent for green field investments in manufacturing made by April 2023.
India has so far raised Rs 17,364 crore ($2.43 billion) in the 2019/20 fiscal year ending in March, against the full year’s target of Rs 1.05 lakh crore,
The speculations are Saudi Aramco, Kuwait Petroleum Corp., and Abu Dhabi National Oil Co. may be interested in Bharat Petroleum as the use of electric cars in developed countries will reduce the demand for oil and India is already a preferred place to dump the remaining.
Bidders for Container corp may include Dubai ports operator DP World Plc; Singapore’s PSA International Pte; shipping firm AP Moller-Maersk A/S’s terminal management unit; and Adani Ports and Special Economic Zone Ltd., India’s biggest private port operator.
The Phrase ‘Amdani Atthanni, Kharcha Rupiaya’ fits best for India. After all, this is the result of more spending than income. It’s high time that the government should stop wasting money on needless issues and start taking the Indian economy as a serious issue before we are counted among the underdeveloped countries.
I hope this privatization will heal the wounds of crisis to a much extent.