People's Democracy

YET another scandalous deal of plunder has been inflicted on the country’s economy in the era of so-called second generation reforms by the BJP-led NDA government. The BALCO, a premier profit-making PSU, is being off-loaded practically free of cost, when there is no economic or any other justification for its sale in the first place.

Why talk of BALCO alone? The infamous BALCO deal was preceded by the sale of Modern Food Industries Ltd to Hindustan Lever, and a company with 14 manufacturing units, seven franchises and huge landed assets at its disposal and sizable market share, was sold at only Rs 104 crore. And now it is the turn of BALCO. Many other PSUs with a huge asset base in the oil, electricity, telecom and other areas are in the queue to be dedicated to the selling spree unleashed by the Vajpayee government. And each and every deal is releasing the bad smell of scams and scandals, frittering away of national wealth. In this process, the country is being put up for sale, brick by brick.

It has to be like that. The whole idea of privatisation is itself scam tainted. For a developing country like ours, suffering from a resource crunch, the whole idea of giving away the regular resource-generating sources like the profit making cash-rich PSUs, which occupy vital strategic positions in the national economy, for a one-time earning of money from sales-proceeds, something like killing of the goose that lays the golden eggs, is itself a devil’s design. No economic theory can justify this, although everyday the hordes of so-called branded economists hired by the sellers’ brigade in governance are doing the same. They themselves also know that they are not talking in terms of economics but actually pushing through the agenda of the prospective buyers and the scamstar sellers’ alliance in the seat of governance.

It is an absolute utopia that such scam-tainted ideas can be made operative in a transparent and scandal-free route, as is being claimed by the present disinvestment minister. It cannot be so, by any stretch of imagination. From day one of the disinvestment exercise, since the Narsimha Rao regime, every deal of selling PSU shares has been through the scandalous route, leading to heavy losses to the national exchequer and people, and gains to mostly MNC buyers and the handling officials. Even the Comptroller and Auditor General (CAG) could not help making scathing observations more than once regarding those PSU share-deals. The off-loading of shares of GAIL in the overseas market at a rate much cheaper than the domestic market rate, and picking up of GAIL shares by GAIL’s rival companies abroad during the present BJP-led regime, glaringly exemplifies the same ongoing process of sale of the country’s precious wealth in a phased manner.

The BALCO sale-deal is the continuity of the same disastrous process. The company is a highly profit making one in the aluminium sector, commanding a share of more than 15 per cent in the domestic market. And the said domestic market is facing a shortage of around, 148,390 tonnes in the year 2000 itself, thus signifying a huge profit-potential of BALCO. BALCO has made consistent profit since more than one decade and has been contributing handsomely to the government exchequer. Only last year it made a profit of Rs 55.89 crore.

It consists of two plants, the bigger one in Korba in Chhattisgarh, and the other in Asansol, West Bengal, with huge land assets, a captive power plant, besides costly plants and machineries, as are natural for a metallurgical plants of its size. And in addition to this huge asset base valued at more than Rs 5,000 crore, BALCO has at its disposal a huge surplus fund of Rs 460 crore. All these are getting transferred to Sterlite Industries at only Rs 551.5 crore. It is not even a sale, it is a transfer of this big aluminium industry, with its right to exploit the country’s aluminium reserve, to a private operator, practically free of cost. What else can it be called, but, ‘the plunder of national wealth’?

And those tainted liberalisers in government, who used to swear everyday in the name of ‘competition’, have now given birth to another almost-monopoly player in the country’s aluminium market - suffering from a huge shortage compared to domestic demand - by selling BALCO to Sterlite, thereby making Sterlite the third largest aluminium producer in the country.

After the proposed sale of NALCO, another aluminium producer in the public sector and the Sterlite’s ongoing bid for taking over the major shares of Hindustan Zinc and its strong presence in the bauxite sector, the industrial exploitation of the country’s vast natural resources are being placed in private hands. The industries using aluminium and other metals are destined to suffer after privatisation of this sector; producing a vital industrial input, the very presence of BALCO and NALCO in the public sector has always been a factor to keep the price line under reasonable control.

The manner in which the wholesale-deal of BALCO has been processed, exposes a clear unholy collusion between the seller and the predetermined buyer. All the players and agencies involved in the process have been doctored to ensure that the sale becomes a buyer’s deal.

The disinvestment minister claims that the sale was finalised through "open global tender." But the reserve (minimum) price was fixed extremely low, at Rs 359 crore, totally unrelated to the real value of the asset, so that it became a bonanza for the purchaser and a loss to the nation. Even the minister could not but admit that the reserve (minimum) price was fixed on the basis of the book value of the equity, which does not reflect the real value of the assets (around Rs 5000 crore) being transferred.

Even the process of valuation of assets of BALCO has been so tutored as to keep the company severely undervalued, again to the buyer’s advantage. In the first place the job of valuation of the asset base of the metallurgical plant was entrusted to a person having knowledge of only land and property- valuation and not of plants and machineries. His expertise in valuation is further questionable since this particular valuer admitted to having ignored the market share of an working plant like BALCO, and its huge surplus reserve of Rs 460 crore, as "extraneous matter" or "irrelevant" (sic!) (The Times of India, February 22). The particular process of valuation is thus totally flawed as the editorial of The Times of India, of February 23, was constrained to comment.

These facts have been clearly brought to the notice of the World Bank-returned minister of disinvestment. Dipankar Mukherjee, the CPI(M) MP in the Rajya Sabha wrote to the disinvestment minister questioning the credibility of the particular valuer engaged for valuation of BALCO, as also the reliability of the whole valuing process. In his letter to Arun Shourie, Mukherjee pointed out,

Instead, the selling agency i.e., the government, chose a valuer knowing he had experience only in valuing some hotels, and asked him to submit the valuation of big metallurgical plants in ten days time, of which he spent four days in the Korba plant and only two days in the Asansol plant.

When questioned on the unseemly haste in finalising the BALCO sale to Sterlite, the disinvestment minister replied that the process had been going on for the last four years. We do not know what has been "going on" in the last four years, but it is for everyone to see that the most important part of the selling process, the valuation of assets for deciding the selling price has been attempted only in ten days out of their stated homework for the last four years.

Questioned again on this very aspect the same minister gave his expert opinion that asset valuation as such is not required for deciding the price of a ‘going concern’, and valuation is done "only to complete the process" which statement of the minister is to be relied upon?

In its eagerness to be acknowledged as American imperialism’s junior partner, this BJP-led government has become mad in its selling spree of national assets. And to cover up the crime, falsehoods and tricks are desperately being resorted to. To plead legitimacy of the infamous deal, the minister stated that trade unions were consulted in the matter, but he did not say that every trade union has opposed the sell-out of BALCO. He did not say that as part of the deal with Sterlite, the minister was ‘kind’ enough to ensure protection for the existing workers for only one year and thereafter, the new employer was free to do whatever he likes with the workers. The ‘noted’ economist in the privatisation camp, Bibek Dev Roy, felt no compunction in a TV discussion on February 22 (News Hour, Star News) that because of this one-year condition, the selling price has become somewhat lower.

Everybody with any sense and sanity is raising his/her voice against this outrageous bid to sell a precious public sector enterprise by any means. On February 22, even members from the NDA camp in Parliament felt compelled to question the ‘transparency’ and ‘fairness’ of the selling exercise, not to speak of the Left MPs who have always been in the frontline in opposing such thoughtless privatisation. The chief minister of Chhattisgarh state has threatened to cancel the mining lease of BALCO in the event of its going into Sterlite’s hand. Only the ‘swadeshi’ brand BJP brigade are defending the infamous deal, backed of course by those in the ASSOCHAM/FICCI/CII the prospective beneficiaries of similar plunderous deals in future.

On February 26, the people of Korba in Chhattisgarh, along with the trade unions and other mass organisations of the area, have been observing a bandh to record their opposition to the plundering of national wealth by the Scamstar sellers in governance.

The CITU secretariat, in a statement issued on February 22, has condemned the plunder of BALCO sell out by the BJP-led NDA government just before the union budget, and called upon the working class and patriotic people of the country to oppose by all means this treacherous move of the government to sell off the precious wealth and assets of the country one by one.