Is the BJP Government Privatizing PSUs to End Reservation?

The Bharatiya Janata Party (BJP) government is currently under scrutiny for its aggressive push to privatize public sector undertakings (PSUs), particularly those incurring chronic losses. This strategy is often seen as a way to curb reservation policies, which have been a focal point of debate in India for decades.

The Case for Privatization

Consider a repair machine with a capital cost of 100, expected to earn 50 per month, with four workers each earning 10. The maintenance cost comes to 50 per month. If you receive a deal to sell this machine for 100, with 50 per month compensating you for maintenance and salaries, would you agree to the sale?

This scenario reflects the current situation in manychronically unprofitable state-owned enterprises (SOEs). While SOEs making profits are not being sold, those that are incurring substantial losses or have heavy production costs are being privatized. Ambedkar, a prominent Indian social reformer, demanded a separate country for marginalized castes in the 1932 Round Table Conference, rather than quotas or reservations. Reservation policies were introduced to ensure fair representation of historically marginalized communities, but they have faced significant scrutiny and debates over their efficacy.

The Impact on Reservation Policies

In the context of the Round Table Conferences and the Communal Award, it is clear that reservation policies were a response to historical injustices and disparities. However, as the Indian economy evolves, the government’s focus on privatization is seen as a means to remove certain state assets from public ownership and reduce the financial burden on the government.

The BJP government has been actively privatizing its profitable ventures, drawing bids from companies like Adani and Ambani. State-owned enterprises such as Air India, which has not attracted investors, are being privatized while the most profitable units like LIC (Life Insurance Corporation) and Bank of India are being divested. LIC, which commenced operations with 5 Crore Rupees, has paid regular dividends, including 2000 Crore in 2020, a fact that underscores its profitability.

Effects on Employment and Non-Performing Assets

The government's push for privatization is also aimed at streamlining operations by removing non-performing assets. However, this strategy has raised concerns about the potential for price manipulation and the concentration of these assets in a few hands. Bank of India, a profitable bank specializing in trade finance, and the Central Bank of India are also being marked for divestment.

While reservation policies pertain to government jobs, and these are unlikely to be impacted, the government aims to bring in private players to reduce the financial burden and streamline operations. Private sector companies do not adhere to reservation policies, and while skills matter, it is clear that private sector jobs are accessible to people from various castes who possess the necessary skills.

Conclusion

The BJP government’s privatization strategy is a complex issue with far-reaching implications for the Indian economy and society. While privatization can bring about efficiency gains, it also raises concerns about fairness and the potential concentration of economic power. The long-term impact of this strategy on reservation policies and the distribution of economic opportunities remains to be seen.