The Privatization of Public Sector Units

The June 2nd Business Standard carried an opinion by Mr A B Bardhan, Secretary of the Communist Party of India, on the question “Should the disinvestment ministry be scrapped?” He said,

Even Lord Keynes would not have approved of disinvestment! Even he believed that there are some areas the government should not step out of. … Disinvestment means privatizing profits and nationalizing losses…. Profit making public sector units should not be privatized for two main reasons. First, because they are major contributors for taxes, and, second, they pay huge dividends. … Selling profit-making PSUs, like Oil and Natural Gas Corporation, is akin to selling jewels to buy groceries. … I am against privatization of the state electricity boards. I simply do not understand the merits of the decision of setting up state regulatory commissioners even as private distributors increase costs repeatedly. In a state like Delhi, for instance, can any private power distributor without an established work force be able to carry out electrification? …

For the record, I have to make a disclosure first. Mr. Bardhan is a respected elder to me. So when I differ with him vehemently, I do so with the utmost respect and regard for him. With due respect, I think what he says is nonsense and nonsense of the most pernicious kind. The entire piece in the Business Standard is a study in how wrong-headed thinking carried on over an entire life-time can warp the judgment of a well-meaning and idealistic person. I don’t doubt for a moment his total commitment to the lot of workers. I am confident of his sincerity for the well-being of labor. But good intentions are far from sufficient in making things better. Let me save you from drowning, said the monkey to the fish, as he put it up on a tree.
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