Govt in business

The Centre must urgently return to its 2021 divestment policy, as only privatisation can transform the working culture of PSES

- AJAY TYAGI

Prime Minister Narendra Modi was spot on when he said, "The government has no business to be in business," during a webinar on disinvestment in February 2021. His brief speech was well drafted, and the message was clear. This event followed the Union Budget 2021-22, which announced the government's policy on "disinvestment in all non-strategic and strategic sectors," setting an ambitious disinvestment target of ₹1.75 trillion for FY22.

Unfortunately, as with many such noble pronouncements, the reality has turned out to be quite different. In fact, there has effectively been a policy U-turn, with the level of divestment activity now even lower than it was before FY21. The table provides year-wise details, from FY15 onwards, of the annual divestment targets and actual achievements in public sector enterprises (PSEs).

The practice of fixing annual divestment targets in the budgets was designed to tap an additional revenue source to contain the revenue deficit. As we examine in this column, the case for divestment goes far beyond this aim. In fact, the other considerations dwarf the revenue-generation objective.

Before turning to the question of the government's capability in handling commercial activities, consider the overall roles and responsibilities of a democratically elected government towards its citizens. They are truly mind-boggling, at times even incomprehensible.