Re-Monetization – Public Sector Disinvestment Policy – Narrative .

Post-independence, the then government, within the established socialist welfare thinking, at the time rightly so, decided upon a mixed economy model wherein key or core industries and business areas were kept within the government run public sector, especially in the heavy industry areas such as steel plants, heavy machinery, equipment, plants etc.

While the thinking behind this policy was sound, the founding fathers of independent India did not count on the inevitable laziness, inefficiency and leakage that followed when employees, in quasi government service knew they could not be fired, and of course, where senior appointments were not based on merit or sound requisite experience.

The growing venality of the bureaucrats and politicians sitting astride these enterprises did not help the cause, making most public-sector enterprises sick and a net drain on the tax payers money; the exchequer. The real story remains hidden behind closed files and closed doors and will be exposed by The Rising India Party on winning elections.

The worst offenders in this story would have to be the Defense Public Sector undertakings who failed miserably and let the nation down with no consequences to anyone, least of all to their bureaucrat and political masters. Even the bright spots would have done far better in a mixed Public-Private or strictly regulated Private sector model.

The Private sector in this mixed economy model of socialist and private sector economic functioning was heavily regulated and remained so till the 90’s through the stringent “license raj”; a tool the British had used to suppress and regulate Indian industry and enterprise, and one that our politicians and bureaucrats used to the hilt to perpetuate their money making and patronage dispensing networks.

Consequently, over a period of time, the Indian bureaucrat and politician inheritors, post-independence, used the system to the hilt to garner huge power over the nation and its economy and all who jumped into the corruption, of making money via patronage bandwagon became millionaire and billionaires. Naturally, the whole system bred corruption.

While these models made sense at the time of independence for political and social reasons in view of the state of the nation that the British left us in; a state wherein the country was not industrialized and vastly undeveloped in comparison to their own; which development had been both fueled and financed by us, albeit unwittingly; they make absolutely no sense in today’s India and to continue with the system is committing national socio-economic-geopolitical suicide.

The Rising India Party takes the position that, fundamentally, the government has no Business to be in Business; its business is governance; the creating and maintaining of Policy frameworks that are designed for the growth and welfare of the country and its population; and not trade and industry. That is an activity best left to private citizens and entrepreneurs, of which India has no shortage.

Naturally, this would need to be within the ambit of Laws and Policies that protect and safeguard National and public Interest, including in core areas, including key industries such as defense, education, health, agriculture etc. These policies and safeguards are both possible and practical, and are laid out here.

The Government’s getting out of the business of Public Sector units would release huge liquidity into the economy, further re-monetizing of the Indian economy. In addition, this will provide a massive incentive and opportunity to down-size government, which is bloated and a drain on the tax payer, making it lean and efficient and leaving it free to do what it needs to do; first and foremost, to govern effectively and to the benefit of all our people.

The Rising India Party will announce a slew of measures and Policies as part of its Re-monetization India Policy as below:

  1. The government would announce a near total exit from all Public-sector enterprises which would be privatized or re-launched under Public-Private partnership models designed for different sectors, the basic contours of which are as laid out hereinafter. This in itself would hugely add to the remonetizing of the Indian economy by releasing resources and enormous funds from the mostly low performing or loss-making assets that are most state-run enterprises, which are also dens of corruption and patronage dispensing machines rather than true businesses.

 

  1. The government would, in the first instance, offer up to 75% of the stock to the public with the possibility of permitting a single investor taking a 51% controlling position in each of the public enterprises being put into the dis-investment pot. The government would retain up to 25% of the stock and seats on the Board, especially of critical enterprises such as banks, defense industries and such identified public sector companies or institutions.

 

  1. All such enterprises would also have, by annual rotation, randomly chosen members of the public from a pool of appropriately qualified and experienced professionals on the Boards of such companies. This would be done to ensure that:
     
    1. The national and public interest is always protected.
    2. The interests of the employees during the transition and eventual settlement of public sector employees are taken care of in a fair and equitable manner such that they are not left on the road.
    3. Those staff who are to be marked to be let go, for reasons of performance or lack of skills or other legitimate reasons, would need to be brought under protective public-corporate insurance and / or income protection schemes that would ensure that those being let go are not on the road and have income protection till they can be placed or till they find jobs.
    4. These measures would include re training and re placement schemes thus relieving objections and stress related to take over by new managements.
    5. It would be acknowledged that numerous staff may fall in the redundancy frame due to over-staffing or the highly inefficient and skewed systems of government run enterprises, wherein many are not productive or are inefficient or not adequately qualified or other reasons and that these would need to be relieved. However, the human impact will, by agreement, need to be mitigated and accounted for in any takeover of a public-sector enterprise.
    6. Opportunities for take-over of enterprises by existing in-place managements of originally government appointees would be considered if they come up with viable plans that are adequately funded. In such cases, government staff would resign from government service and function as private citizens. Such a move would provide a fair base on which to re-build these companies and contribute to the nation building narrative, by unleashing pent up talent.
    7. The government would set up Dis-investment Working Groups comprising individuals from the concerned company, the industry, private consulting organizations, banks and financial institutions to examine in detail the state of play in the state enterprise to evaluate the next steps required to transit smoothly, its further development and growth, and to value the concerned enterprise.
    8. Given the nature of the functioning of the bureaucracy as related to these industries, no bureaucrat would be involved in these working groups or the deliberations related to the transfer of a public-sector enterprise into the public-private or complete private mode. In case it is thought appropriate that a bureaucrat(s) should be involved in these deliberations, they would need to undergo a psychometric profiled and polygraph assisted evaluation to assess the integrity or otherwise of the concerned person.
    9. The evaluation parameters would include land and building values, machinery relative to current technologies, human resource evaluation by third party working groups, past functioning and financial history and so on in a comprehensive 360-degree evaluation.
    10. The dis-investments would be carried out in what-ever works for a particular unit, through public bidding or private individual negotiation, that is transparent and on public record and in which members of the public are in the negotiating frame.


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