New Delhi, May 27: The Congress-led alliance today announced scrapping of the disinvestment ministry and said it would not privatise profit-making state-run firms as well as navratna public sector units.
“The United Progressive Alliance will retain existing navratna companies in the public sector... Profit-making PSUs will normally not be privatised,” Prime Minister Manmohan Singh said.
Asked to explain what “normally” meant, Singh said the Centre was willing to look at the other option (privatisation) for those PSUs that cannot face competition even though they make profits under monopoly conditions.
The Prime Minister added that the disinvestment ministry would be scrapped and replaced by a department handling divestment issues that will function within the finance ministry.
The ruling alliance will, however, allow public sector companies and banks to raise resources from the market. The announcement, which was part of the common minimum programme accepted earlier today by allies, remained silent on divestment of shares held by it through market offerings.
Top finance ministry officials said this will continue as it remains “a lucrative way of earning revenues”.
Left leaders admitted they had turned a blind eye on this issue. During discussions on the CMP, the communist leadership had decided to give a wide berth to demands by Left-affiliated trade unions to stall PSUs and banks from making market offerings or to halt the government’s attempts to sell shares in blue-chip firms without giving up management control.
It left its note on this issue, sent to the Congress leadership yesterday, deliberately vague: “There should be a clear commitment not to privatise profitable PSUs, navratnas and those in the core sector. The reference to public-private partnership in infrastructure need not be there.”
CPI leader Gurudas Dasgupta said: “We are against this creeping disinvestment in banks as it helps industrialists with ulterior motives to acquire shares in banks and use these to elect their nominees on bank boards....”
As Dasgupta’s demands on behalf of trade unions have not been met, the labour associations have vowed to fight it out in different fora.
The Manmohan Singh government also said it would try to modernise and restructure sick PSUs, a key Left demand. But it added: “The UPA will induct private industry to turn around companies that have a potential for revival.”
The CMP made it clear that chronically sick PSUs will be sold off or shut down after workers have been paid off. It also promised that proceeds from divestment will ploughed into social sector schemes.
The programme also said it “believes that privatisation should increase competition, not decrease it” and will not support “emergence of any monopoly that restricts competition”. This is being taken to mean that the government will not sell firms to business houses that already have a stranglehold over a particular sector.