Going a step further, Modi government had announced big disinvestment plan in the Union Budget 2022-23 worth Rs 65,000 crore for this fiscal, but has been able to raise only Rs,3,059 crore, obviously much less than the desired speed to achieve the target. Officials in the Union Ministry of Finance are apprehensive about even achieving half way mark, and the government is in serious dilemma over how to speed up the process of disinvestment to cover up the revenue shortfall and fiscal deficit of the centre.

The fiscal deficit of the Government of India for 2022-23 is estimated to be Rs 16,61,196 crore as against the Revised Estimate for 2021-22 at Rs 15,91,089 crore. The Centre’s fiscal deficit at the end of February stood at 82.7 per cent of the full year budget target, mainly on account of higher expenditure. In the last financial year, the fiscal deficit was 76 per cent of the Revised Estimate of 2020-21. In actual terms the deficit stood at Rs 13.16 trillion at the end of February this year as per Controller General of Accounts (CGA) data. Centre’s receipts stood at Rs 18.27 trillion or 83.9 per cent of the Revised Estimate of Budget 2021-22, less than 88.2 per cent of the Revised Estimate of 2020-21.

In this backdrop, disinvestment drive of the Modi government is a desperate move, not a well-planned and well-conceived measure for providing greater participation to the private sector in the Indian economy. The last two years of the pandemic has considerably exacerbated the already worsening condition of the private sector of the country, and majority of them, even bigger corporate are undergoing multiple crises needing government support to overcome the deterioration. It is precisely due to this reason only a handful of the private companies or corporate entities came forward to participate in Modi government’s big ticket sale or privatisation of the PSUs.

No wonder the centre has to put the sale of BPCL on the backburner and there are also doubts regarding transactions related to Shipping Corporation of India (SCI), Concor, BEML, and IDBI bank. Privatisation of Banking and Insurance sector met with stiff resistance from the opposition and their employees unions. Desperation of the government is seen in the fact that despite the choppy market conditions, government got the LIC listed for disinvestment through IPO. Only a few month back in December 2021, the Centre had informed the Parliament that only 8 PSUs’ disinvestment was complete out of 36 selected back in 2016. The process was reported to have been halted in some, while others were caught in litigation. The Centre has revised disinvestment estimate by 55.4 per cent to Rs 78,000 crore in the last fiscal.

In this general desperation and hurry, the Centre has planned its disinvestment programme. Modi government’s interest was to somehow sale the national assets in the name of giving greater participation to the private sector in the Indian economy which will remain a dream in the present scenario at least for the near future. It is government’s responsibility not only to give greater support for the private sector to survive, but also strengthen the public sector that has proved to have the capacity to rescue even the private sector enterprises. However, government rushed to privatise the public sector enterprises, which has now thrown the whole disinvestment programme into rough weather due to a range of reasons from undervaluation of the public assets to committing mistakes in even scrutiny of the participating companies, even if we choose to ignore the allegations of corruption in shady dealings of disinvestment.

The shelving of the disinvestment programme of Pawan Hans Helicopters Limited (PHHL) soon after postponing planned disinvestment programme for the Central Electronics Limited (CEL) has further aggravated the dilemma of the Centre. In both the cases government officials had accepted bids from the companies that were not even eligible and competent, and the disinvestment process for both had to be put on hold after it was pointed out. The order of ‘putting on hold’ came in the PHHL disinvestment only after the National Company Law Tribunal (NCLT) passed an order against the major bid-winning shareholder company that had failed to make payments under the bankruptcy law to creditors under an approved resolution plan. In case of CEL, the Centre had to put on hold the disinvestment process when it was pointed out that the bid-winning company has not even experience of running such venture, and the employee’s union had moved court alleging undervaluation of the assets of this public sector enterprise. In both the cases there are specific allegations.

Such roadblocks have certainly put brake on the overall disinvestment programme of Modi government for now. The dilemma is how to go ahead. The very objective of the present disinvestment programmes is faulty. Selling public and national assets to cover up the fiscal and revenue deficit is a bad idea, since the deficits and losses could be overcome by good governance and right policies in a given circumstance.

The experience of the last two years of the pandemic has sufficiently proved that it was the public sector that came to rescue of the people. Public sector banks supported numerous private sector enterprises. Therefore, the policy of indiscriminate sale of PSUs to a handful of private sector companies will not serve the claimed purpose of providing greater role for the private sector. Scrutiny mechanism and valuation process must be made above suspicion. India must rethink about the very objective and the orientation of the disinvestment programme. It must be delinked from covering up government deficits and linked to strengthen the private sector not by weakening the public sector but by making both support each other in the national interest. Disinvestment programme must also be people centred, rather than merely a tool for raising funds to cover up government deficits or making government friendly companies rich by selling cheap.