People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 40

October 02, 2011


IN DEFENCE OF PUBLIC SECTOR                                

JAF Organises Mass Dharna at  Bangalore


THESE days the public sector workers are quite concerned and worried about the policies being pursued by the government of India, which are directed towards weakening the public sector enterprises (PSEs). This, in turn, will most certainly weaken the Indian economy, lower the contribution of non-tax income to the Consolidated Fund of India in general, and lead to attacks on social justice in matters of employment and also on the interests of public sector workers. With this situation in mind, public sector workers of Bangalore organised a mass dharna in Freedom Park in the city on September 26. It was called for by the Joint Action Front (JAF) that comprises the trade unions working in the Hindustan Aeronautics Limited (HAL), Bharat Electronics Limited (BEL), Bharat Earth Movers Limited (BEML), Indian Telephone Industry (ITI) and Bharat Heavy Electricals Limited (BHEL).


To draw attention to this situation, they also sent a memorandum to the prime minister, detailing their grievances and demands.




Prior to independence, the memorandum pointed out, there were very few public sector enterprises in the country. India was facing problems like unemployment, regional imbalances in economic development and lack of trained manpower, among others. But the roadmap that was drawn after 1947, envisaged the development of public sector as an instrument for self-reliant economic growth.  The public sector provided the required thrust to the economy and developed and nurtured the human resources, which is a vital ingredient for the success of any enterprise. At the beginning of the First Five Year Plan in 1951, there were only 5 PSEs with a meagre investment of Rs 29 crore, whereas at the end of the Tenth Five Year Plan in 2007 the number of PSEs has gone up to 247 with an investment of Rs 4,21,089 crore. Their performance too increased manifold and they contributed hefty sums to the exchequer through payment of dividends, interests, taxes and duties. This was possible through the hard and dedicated work of employees and officers in public sector enterprises.


The significant contribution of the central public sector enterprises (CPSEs) to the Indian economy can be understood from the fact that as of today, the CPSEs contribute over 11 percent of GDP and 27 percent of industrial production. Their share in revenue generation for the government is one third and the government earns a handsome rate of return, 18 percent, on its investment.


A number of public sector undertakings were established to cater to the basic requirements of defence also. Many of these vital PSEs came up at Bangalore. 


These PSEs provided direct employment to lakhs of people and indirectly to many times more. The all round development of Bangalore today, as the silicon valley of India and as the IT/BT capital of our country, was possible because of the existence of major PSEs here. 




But with the introduction of the neo-liberal economic policies of globalisation, liberalisation and privatisation, the situation in the PSEs is turning miserable, as these are thoroughly anti-public sector policies. Hindustan Machine Tools (HMT), the pioneer of Indian industrialisation, and ITI, a major unit in the telecom industry, are already being deliberately destroyed.


Now, rubbing salt to the injury, the government of India has unleashed major offensives by way of disinvestment in the HAL and BHEL. The policy of disinvestment includes the sell of shares of the CPSEs, including those of the profit making CPSEs, at throwaway prices. This is detrimental to the interest of the nation, because the CPSEs were built with the tax money paid by the people of this country.  


Over the last six decades, Hindustan Aeronautics Limited has grown progressively into an integrated aerospace organisation and one of Asia’s largest aeronautical companies. It owns vast tracts of lands in Bangalore and has established production divisions and research and development (R&D) centres spread across the country. It had reserves and surpluses to the tune of Rs 8,000 crore in 2009-10, with the government of India holding the equity of just Rs 120.50 crore. It had the sales turnover of more than Rs 13,000 crore and its profit before tax amounted to Rs 2,800 crore. The HAL recently produced light combat aircraft (LCA) and Tejas for the Indian Air Force (IAF). It has signed contract with Russia and is already in the process of developing its capabilities for indigenous production of Russian-origin Sukhoi-30 MKI fighters.


It is shocking to note that despite the trade unions in the country vehemently opposing disinvestment of PSEs, the ministry of defence has, on the pretext of modernisation of the HAL, initiated the sale of its shares. It will disinvest 10 per cent of its holding in the next five years and thereby mobilise Rs 20,000 crore. This is an unscrupulous ploy to privatise the HAL in phases and thus befool the people. In the past, some of the shares of two defence public sector undertakings, namely the Bharat Electronics Limited and BEML Limited, have already been sold off. In fact, all the successive governments in the last two decades, irrespective of the party at the helm of affairs, have imposed this disinvestment policy on the nation.


During the UPA-I regime, this policy had to be kept on hold because of strong presence of the Left parties in the parliament; we know well that these parties have a strong commitment to protecting and strengthening the public sector. But now the UPA-2 government is aggressively imposing this disinvestment policy as the Left presence has got reduced in the parliament.


In this regard, despite the government’s claims about modernisation and what not, the fact is that any money realised by disinvestment will go to a National Investment Fund (NIF) and the corpus is to be spent for funding the stimulus packages for the big business and corporate houses and to meet the budget deficits.  Thus the disinvestment of HAL will not only lead to its privatisation but also give scope to multinationals to purchase shares directly and indirectly, which will jeopardise the very defence preparedness of the country.  




Another valuable public sector enterprise is BHEL. The government is hell bent on further disinvesting 5 per cent equity of the company out of its shareholding of 76.72 per cent. This process may lead to dismantling of this giant blue-chip CPSE.


The defence procurement policy (DPP) emphasises repeatedly on the need of indigenisation of defence products. With this aim in view, the condition stipulated is that 30 per cent of all orders above 300 million dollars should be placed with Indian defence manufacturers. Shockingly, however, the government is seeking to dilute this condition to the disadvantage of the defence public sector undertakings such as the BEL and HAL, as has been been brought to light by two articles recently published in economic dailies. The downright hypocrisy of the UPA government stands exposed in this matter.


A premier ‘miniratna’ Category 1 unit is the BEML that has state of the art technology and has its manufacturing units at Bangalore, Kolar Gold Fields (KGF), Mysore and Palakkad, and also a subsidiary (Vigyan Industries Ltd) in Chikmagalur district. The BEML has been playing a pivotal role and serves diverse sectors of Indian economy like defence, rail and Metro rail, mining, power, steel, irrigation, construction, road building, aviation, etc. The company has a good track record in the matter of performance.


The Coal India Limited (CIL), a ‘maharatna’ company, and its subsidiaries, which are managed by the government of India, are major customers of the BEML that is a pioneer in the manufacture and supply of mining equipments in the country. It has been supplying the equipments and spare parts to the CIL for the past several decades. A major chunk of its revenue comes from the sales of spare parts to the CIL. But because of the Coal India changing its procurement policy, the orders are getting diverted to private Indian and multinational companies. This is seriously affecting the spare parts business --- more so at a time when the impact of slowdown in the mining sector and general recession has affected the company’s performance during 2010-11.




The Indian Telephone Industry (ITI) is the first public sector industry of the country. Its case is now before the Board for Industrial and Financial Reconstruction (BIFR) due to wrong policies of the central government. Its contribution amounts to 50 per cent of the present national telecom network. Despite a great boom in the telecommunication field, the ITI has not been allowed to diversify its activities. A proper revival package is yet to be considered for it. Moreover, ITI employees are being discriminated against by a reduction of the age of their superannuation --- 2 years earlier, i.e. to 58 years --- while this age is 60 years in case of other CPSE employees. A major demand of all the public sector workers is that ITI employee should be treated on par with other CPSE employees and superannuation age for them must be enhanced to 60 years.


In the meantime, the number of regular employees in the CPSEs is consistently declining every year, while the number of contract workers is increasing. They are being deployed in regular operational jobs, paid much less as wages and are thus being severely exploited.


It was in view of the existing situation that the Joint Action Front organised the said dharana at Bangalore, demanding that the government immediately stop disinvestment of the HAL and BHEL, immediately stop favouring the multinationals, desist the Coal India Limited from favouring the private players at the cost of the BEML and finalise a revival package for the Indian Telephone Industry.


Leaders of the JAF’s constituent organisations including S Prasanna Kumar, B V Manohara, C V Krishnappa, Krishna Reddy, Mahadeva R and Javare Gouda addressed the workers who participated in the dharna.