NEW DELHI: Privatisation is for giving impetus to growth of an organisation, as it is difficult to sustain public sector undertakings (PSUs) with taxpayers’ money, Tuhin Kanta Pandey, secretary at the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance told this newspaper.
He cited the examples of Air India and Neelanchal Ispat Nigam Ltd (NINL) as successes of the government’s privatisation efforts. After the privatisation of Air India, activities have gone up at all levels, whether it is the service quality, on-time performance, food or complaint redressal, he said.
“Walk-in interviews have begun in Air India. People over 65 years are being recruited in Air India. More people are being called in for jobs, which is in contrast to what people were saying earlier. Post-Covid, there has been a recovery. More planes mean more MROs, more orders, so the impact of privatisation is huge,” Pandey said.
“In the government sector, it is difficult to give prompt employment to people. Employees want growth in any organisation. So growth, investment and jobs can be achieved through disinvestment also. People don’t realise the opportunities in the brown field also,” he further added. In the NINL case, Pandey said the government didn’t get any money, but the economic effect of the privatisation was immense.
“There were six joint ventures of Rashtriya Ispat Nigam (RINL). The net worth was negative. Blast furnace had to be shut down. There was no scale and efficiency, due to which promoters’ money was sinking. Employees were on the verge of suicide. Due to this deal, employees were paid their dues worth Rs 350 crore, banks were paid their dues without any haircut….,” the secretary added.He said that the blast furnace started working after the privatisation.
On the criticism of the government selling profit-making PSUs, Pandey said: “There is no guarantee that the profit-making enterprise will continue making profits. Take the example of RINL, which has been incurring losses and is on the verge of insolvency bankruptcy.” RINL reported profits from 2011-12 to 2014-15 and started incurring losses thereafter. It posted a net loss of Rs 789 crore in FY21 on the second-highest turnover of Rs 17,980 crore.
The Visakhaptnam-based steel plant incurred net losses of Rs 1,421 crore, Rs 1,263 crore and Rs 1,369 crore in FY15, FY16 and FY 17, respectively. In 2018-19, it reported a profit of Rs 97 crore, but in the following two financial years, it posted a loss of Rs 3,910 crore and Rs 789 crore.
Success story of AI privatisation
Tuhin Kanta Pandey says after Air India privatisation, activities have gone up at all levels
AI’s service quality, on-time performance, food have improved, he says
More people are being recruited after privatisation