“Loss making” cannot be accepted as justification for privatisation of a public sector enterprise


by Sanjeewani Jain, Vice President, Lok Raj Sangathan

This is the first in series of articles about spurious justifications given to justify privatisation


Minister after minister in government after government has tried to justify the sale of public sector enterprises by claiming that they are loss making. This excuse is totally unacceptable for many reasons.

First and foremost, the government is not a commercial or business enterprise set up for making profit. From ancient times, it has been accepted in our country that the Raja has the important duty of looking after the sukh (welfare) and suraksha (security) of the Praja (people). That is why he has the right to collect taxes from them.

In this day and age, we have no Raja, but the various governments have taken over the right to levy various taxes on us. Everyone staying in our country pays taxes, whether they pay income tax or not. It doesn’t matter if you earn a salary of five lakhs a month or five thousand. Whenever you buy necessities in the market, you have to pay the GST. Diesel and petrol are heavily taxed (so much so that the tax rates for them are among the highest in the world) and this of course translates into higher prices that we shell out for practically everything we buy. Indeed, the indirect taxes amount to about two thirds of the total taxes collected by governments year after year.

Rights and duties go hand in hand, or should. So obviously the governments have duty of ensuring the security and welfare of the citizenry!

However, we find that year after year, while the taxes have kept on increasing, the returns to the people – by way of government ensured health care, education, basic infrastructure like water supply, roads, sewerage, etc. have kept on falling.

The budgets of the Central government on health and education are miserable, even when compared to the not-so-rich countries. Before our eyes we have seen how public schools and hospitals have been starved of funds and the services have been pushed into deterioration. It goes without saying that this benefits the private players in this field. Even big monopoly corporations have stepped into this field to make a killing (in more senses than one!). The result of this was sharply brought into focus during the recent pandemic when the interests of the pharma industry and corporate hospitals were encouraged to ride roughshod over those of the common people, many of whom were driven to early and preventable death!

Secondly, capitalists are not fools to buy loss making enterprises. In several cases, we find that whenever a big capitalist has eyes on one enterprise, the government steps in to turn it into “loss”-making. We will soon put up articles with recent examples  – of BSNL, which served capitalists like Ambani and Mittal (of Airtel) and of Air India which has served the interests of Tata.

Thirdly, many of these enterprises are situated on prime land and have such valuable assets that profit and loss calculations cease to matter. Take the example of the HAL and Rail Wheel Factory from Bengaluru. Decades ago when they were set up, both these factories were on the outskirts of Bengaluru. Like any other metro city, Bengaluru has expanded and swallowed them up, so the land they sit on is of eye-popping value. If they fall into private hands, what or who is to stop the owners from stopping or curtailing production even if it is vitally important for our country and people and cashing in on the real estate? The case of the Integral Coach Factory in Chennai is no different – it occupies a large tract of prime land!

Look at a station like CSMT (formerly VT) in Mumbai. Big corporates are salivating over the profits they can earn by constructing malls or hotels there. This is over and above what they will get by over-charging for everything on the station – food and beverages, platform tickets, fees for the use of toilers, drinking water, etc. The sky is literally the limit!

It is up to us, the educated members of the working class to explain to everyone that the governments’ excuse of selling loss-making enterprises is totally unacceptable!

(The next few articles will provide specific cases of PSUs made loss making to justify their privatisation)

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