Lessons from struggle against first complete privatisation of a public sector enterprise, Modern Foods in 2000


By Dr. Sanjeewani Jain, Vice President, Lok Raj Sangathan


Twenty three years ago, the then Vajpayee government began privatisation of public sector enterprises by deciding to sell off the government – owned Modern Foods India Limited (MFIL) to a private multinational company, Hindustan Lever. At that time, the thousands of workers of Modern Foods, led by the Mazdoor Ekta Committee (MEC) launched a heroic struggle to prevent their company being sold off. Today it is important to recollect this heroic struggle, for many of the lessons are very relevant today.

For seven long and difficult years the workers held out, using different forms of struggle like protest demonstrations in front of parliament, appeals to members of parliament and to the Delhi Government, and going to the court. They even sat on dharna at the factory gate for nearly two years! However, all their efforts did not succeed and ultimately the Modern Foods was sold to the multinational.

Though this struggle did not end in victory, it was a big path-breaking step in the workers’ movement and it inspired the workers of another targeted company, BALCO (Bharat Aluminium Company) as well as the trade unions of electricity board workers in various states to join the movement against the privatisation program. In the face of this opposition, the Vajpayee government had to set up a Prime Minister’s Special Committee in October 2002, to investigate the consequences of privatisation.

By the time the Special Committee submitted its report to the government in September 2004, the NDA had been replaced by the UPA led by the Congress at the centre. The union demanded that the report be placed before parliament and discussed. However, the government headed by Prime Minister Manmohan Singh ignored this demand.

When Modern Foods was put up for sale, the government had claimed that “It is not the business of the government to make bread”. Today the government has put up all public sector enterprises for sale, declaring “it is not the business of the government to be in business”. The capitalist media had tried then to justify the sale, claiming that Modern Foods was loss making. This justification is being used today as well, for instance in the recent sale of Air India.

We need to challenge the ruling class and its governments on both these counts!

Firstly, would any capitalist offer to buy anything at a loss? The answer is obvious to even a school kid. The sole goal of any capitalist is to maximise his profits. In countless cases of sale of so-called loss making enterprises, it is seen that:

  • Either the enterprise is deliberately turned into loss making to justify the sale (for instance Air India)
  • The real interest of the capitalist is to acquire all the assets (including first and foremost the priceless land) at a pittance.

In the case of Modern Foods, Mazdoor Ekta Committee and the Modern Foods Employees Union had brought to light how the total (movable and immovable) assets of the company, which were valued at over Rs. 2000 crores, were handed over to the multinational Hindustan Lever for a mere Rs. 124 crores!

In the case of innumerable railway colonies we can see the same thing. For instance, land in the MMR (Mumbai and surrounding cities) is of mind boggling value. If we talk to the residents, we find that the upkeep and maintenance of the buildings is being systematically neglected so that they became unsafe. Residents have no choice but to vacate them. The next step is demolition, which is already happening in several cases. Is this a prelude to selling of the land? We have to be vigilant!

Another very important question is “What is the duty of the government?” This question has been asked and answered in our country centuries ago. It was accepted that the king has the right to collect taxes from his people because he has the duty of ensuring their sukh and suraksha (well-being and safety).

What is the record of the sarkars formed by various parties, including the Congress, the BJP and others? In today’s India, we have these governments instead of kings. We see that governments are very prompt and energetic in collecting increasing amounts of taxes from people. But when it comes to its duty of ensuring the sukh and suraksha of the people, in real life the governments do the opposite! On the other hand they compete in favouring the big corporates and give out innumerable tax benefits to them, write off their debts and pass laws and policies meant to further enrich them at the cost of the people.

In 1947 and for decades later India was recognised as one of the poorest countries in the world. The scene is not really different today, either, if by “India” you mean its people, rather than billionaire capitalists. On every count of Human Development, India is close to the bottom of the countries in the world – whether you take poverty, hunger, malnutrition, and infant mortality … the list is endless.

It is time we in the movement against privatisation stop accepting that government owned services have to be profitable. It is the duty of the government to ensure that the basic necessities of the people – whether, food, water, sanitation, education, health, electricity, transport and so on are fulfilled.

The experience with Modern Foods and with other examples of privatisation since then teaches us that:

  1. We cannot accept the justification of loss-making for privatising any enterprise. Firstly, many such enterprises are turned loss making by the government in order to justify the sale and slash down the selling price.
  2. No capitalist would want to take over a government owned enterprise, profitable or not, unless the transaction would be extremely profitable in the long run.
  3. The needs of the people are of overriding importance; the government is duty bound to fulfil those needs. Considerations of profit should simply not be there!



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