Last month, NITI Aayog Vice-Chairman, Rajiv Kumar, had disclosed that the Modi government is going to witness several ‘big bang’ reforms during the first 100 days. One of such reforms is going to be a massive privatisation program initiated by the Modi government. The government would reportedly focus upon privatizing or closing down more than 42 Public Sector Enterprises owned by the government in the coming months. The government is also considering lifting the Foreign Direct Investment (FDI) Cap on the national carrier, Air India, making it easier to privatise the loss-making State-owned enterprise.
As per Kumar, the government would also create a holding company, immune from ministerial interference that would control the PSUs. This will be done in order to expedite the process of asset sale and to avoid the bureaucratic hurdles. The government also plans to offer swathes of unutilised lands owned by the Public Sector Enterprises to foreign investors. Such unutilised parcels of land could cater to specific clusters of enterprises or industrial corridors. This will lead to minimisation of risks for foreign investors and protect them from legal disputes and disputes concerning ownership and development of project sites.
The PSUs have been bleeding crores as most of the entities are loss-making on account of inefficient and poor management. The government has been sustaining the loss-making State-owned enterprises even though they have not been adding up anything substantial to the process of national development. The government is losing out in excess of Rs.1 lakh crore every year courtesy the Public Sector Enterprises.
It must also not be forgotten that the PSUs is one of the biggest employers in the country. As per the Public Sector Enterprises Survey 2016-17 laid in Parliament, the total number of permanent employees serving in the State-owned enterprises stood at 11,30,840. It is important to mention here that the recruitment process in the PSUs follows the caste-based reservation criterion. While the government departments also allow caste-based reservation, it turns out to be an absurdity in the case of PSUs. It must be remembered that PSUs are not government departments, but business entities controlled by the government. In such a scenario, merit and qualification become a must and any form of reservation based jobs in business entities could turn out to be catastrophic because it compromises on merit and qualification. Reservation in government departments does not have a similar effect, because they are in the nature of administration rather than being business entities. Businesses entities have to face stiff competition particularly in the present era and there can be no room for compromising on merit.
One of the consequences of privatisation would be more jobs going outside the ambit of caste-based reservation. There is no system for caste-based reservation in the private sector, and therefore these jobs will become fully merit-based once the PSUs are privatised. This will naturally result in recruitment of meritorious and better qualified employees, which in turn will rid these loss-making entities of poor management and inefficiency.
The government has already started the process of diluting caste-based reservation by introducing the lateral entry scheme, which is expected to be further expanded during the current term of the Modi government. In a massive shake-up, it is expected that 40 per cent of the Joint Secretaries will be non-IAS. Once the government starts recruiting Joint Secretaries from outside the civil services, the component of caste-based reservations having an impact on the top brass of the bureaucracy itself gets reduced. This is a historic change being ushered in by the Modi government and its positive consequences will be felt later, once the ‘big bang’ reforms are successfully implemented.