3
THE GENESIS
Mr. Vajpayee, Prime Minister of India, had conducted a series of meetings before announcing his decision to use public money for public investments. However, this decision did not last long.
A powerful syndicate began to work in private interest. This syndicate had stranglehold over the entire system. A sinister privilege began to play in private interest either presumably due to some pressure from within or Mr. A.B. Vajpayee had taken a decision to work in selfish interest and private interest.
Thus - within two days - the Economic Advisory Council was convened presumably at the instance of the industrialists.
Mr. Yashwant Sinha, Minister for Finance, Dr. Kirit Parekh, Dr. Amaresh Bagchi, Mr. Jagdish Shettigar, Dr. Rakesh Mohan, Dr. Vaidyanathan, Dr. Shankar Acharya, Dr. Ashok Lahiri and Dr.R.K.Pachauri, attended the meeting. The special invitees included Mr. K.C.Pant, Mr. Murasoli Maran, Mr. Suresh Prabu, Mr. Arun Shourie, Mr. Agit Singh, Mr. Arun Jaitly, Mr. B.C. Khanduri, Mr. N.K.Singh and the Governor of the RBI, Mr. Vimal Jalan.
The industrialists succeeded in torpedoing an excellent opportunity to develop India by leap and bounds through public investments.
Thus, Mr.Yashwant Sinha opposed a massive public investment programme to reverse the economic slowdown.
Mr. A.B. Vajpayee was not allowed to talk.
A sea change in the policy occurred as the Government gave in to pressure and resumed privatization.
Mr. A.B. Vajpayee virtually lost full control over the system and began to play a new role that too reluctantly. Thus, he - instead of watching and supervising the administration - allowed the above syndicate to determine the priorities of the land.
Within a few days, the Government sold Computer Maintenance Corporation (CMC), which had been showing a growth rate of 27% in preceding three years, to Tata Sons for Re. 207 crore - a price lower than the market price.
Himachal Futuristic Communication Ltd brought the Hindustan Teleprinters Ltd (HTL) for Re. 152 crore.
Mr. C.R.L. Narasimhan of The Hindu and other newspapers commended the privatization policy of the Government.
Mr.Harkishan Singh Surjeet, General Secretary of the Communist Party of India (CPI-M), however, pointed out that “Modern Foods” which was worth nearly Re. 2,200 crore was sold to Hindustan Lever for a paltry Re.150 crore and the BALCO was thrown away for 10% of its estimated value of Re. 5,500 crore.
While selling the PSUs, Prime Minister, for joke, said that the Government was opposed to privatization of profits and socialization of pains.
Now he wanted to sell the big PSUs to some big industrialists. At the same time, public money also must be given to them through the banks because they were not ready to wait.
Further, in order to enable the banks to give the money to private parties, the Government would have to pump in public money into the banks.
He could not reconcile all these with his patriotic principles. Therefore, he requested Mr. L.K. Advani, Home Minister, to do the job during his foreign tour.
Thus, in the second week of November, Mr. Vajpayee left New Delhi for a ten-day tour of Russia and the USA. The Cabinet Committee on Disinvestments (CCD) chaired Mr. L.K. Advani, Home Minister, decided to sell 51 percent equity in Indian Petrochemicals Ltd (IPCL) including 26 percent to a strategic partner in 90 days.
At the same time the Bank of India (BoI) gave an advance of Re. 845 crore to Tata Finance.
The crucial question before the present writer was whether Tata took the money for investment purposes or to buy the PSUs. The present writer had been waiting patiently to know this.
After a few months, the IPCL was sold to Reliance Industries Ltd (RIL) and the VSNL to Tata. Each one was worth Re. more than one lakh crore.
The sale of the IPCL was unconstitutional because it violated a guideline for privatization. The sale of the VSNL was unconstitutional because public money was used to buy it.
This was the genesis. Mr. L.K. Advani did not explain his role to the people.
In the meantime, the US Federal Reserve imposed a hefty $7.5 million fine on the State Bank of India for collecting money violating several local laws.
The seventh Inter State Council (ISC), was convened as soon as Mr. Vajpayee returned from the USA. In the meeting, Mr. Chandra Babu Naidu, Chief Minister of Andra Pradesh state, asserted that Re. 9 lakhs could be collected from the service tax alone.
Further, the meeting accepted the demand of the Chief Ministers to bring taxation matters under concurrent list. It was a step beyond the Sarcaria Commission recommendation.
Now the Reserve Bank of India (RBI) allowed the banks to give 5% of their deposits as credit to brokers. It was an unconstitutional decision.
‘The New Indian Express’ on 17 November 2001 said that Government would have to pump in 10,000/-crore to keep the Indian banks healthy and stable and wanted to raise capital directly by diluting its holding.
The above decision was to enable the banks to lend money for buying the PSUs. Thus, the public money that might have been used for public investments also had to be handed over to the banks.
Mr. Arun Shourie, Minister for Disinvestments, now said that the processes to sell the VSNL and the Indo-Burma Petroleum (IBP) were on course. He added that the old stories would not be repeated and the PSUs would be sold as planned.
The Minister for Finance also said that there would be no holding back of reforms (privatization).
Now, the Ministry of Communication asked the BSNL to re-negotiate prices for buying the equipments for its countrywide cell phone network as the winning companies had hiked prices by forming a Cartel. The new Indian Express on 23 November 2001 described this as a trick by the Ministry. The companies involved were Motorola, Lucant and Ericsson.
Due to the above developments, one more letter (letter No. 2) was sent to Mr. A.B. Vajpayee and the important Chief Ministers on 20 November 2001.
In this letter, the present writer chose not to level any charge against anyone in power. The facts were also not mentioned, lest the system would hide everything.
The letter follows.
From
V.Sabarimuthu,
Thattankonam,
Vellicode,
Mulagumoodu, P.O.629167.
To
Mr. A.B. Vajpayee
Hon’ble Prime Minister of India,
Parliament House,
New Delhi.
Your Excellency,
While our toiling hands in the form of NRIs flood the banks with hundreds of crore everyday, the Government is selling Public Sector Undertakings, (PSUs), the value of which cannot be measured in terms of money. The PSUs belong to all people all over India and giving them to a few people of one or two states under any principle is not only painful but also it would lead to lopsided development leaving the common man with no firm soil to stand. In fact, our IAS officers are capable of running them more efficiently and more profitably than others provided they are split into smaller units. Even in England, the privatization of railways ended in fiasco. Even if the private industry becomes sick, the Government will have bail them out. As such, we must save our PSUs and maintain the diversity in industry. Further, in order to buy one PSU after another with bank funds, public funds or ill-gotten funds, the industrialists refrain from starting any new industries and it is one of the reasons for the recession. Above all, the mind and tongue of our people are governed by ignorance mainly due to our print media and it is our paramount duty to preserve the PSUs with perseverance for the benefit of posterity.
In the light of the above and in continuation of my letter dated 1-6-2001 most kindly consider the question of:
1. Abandoning the policy of privatization to encourage the corporate houses to start new ventures.
2. Banning all financial institutions (FIs) from collecting more than 10% interest on any kind of loan and rescheduling all existing loans to save the people from the debt trap.
3. Making it mandatory for all banks and FIs to report to the Chief Minister any transaction over Re. one crore and to get the clearance of the State Cabinet for transaction over ten crore as in the USA.
4. Directing all banks and all FIs to disburse 60% of the credit to the rural areas to uplift the rural masses.
5. Annulling the recent decision of the Governor, RBI, to give 5% (nearly Re. 25,000 crore) of the credit to brokers because giving any money to about 100 broker boys of one or two states is anti constitutional, as it would affect the interest of all people all over India.
6. Permitting the major State Governments to collect at least Re.10,000 crore each from all kinds of service charges in this year alone.
7. Directing all insurance companies other than the LIC to remit 30% of the premium amount to the State Governments.
8. Giving an interim relief of 30% to all employees and Re.500 per month to all non- pensioners above 60 years in order to control recession.
9. Granting a pension to the NRIs proportionate to the amount sent by them through banks and paying a lump sum to those who die in harness to control hawala transactions and
10. Asking all Punchayats all over India to construct one auditorium or one hospital each using bank loan as it is a self-sustaining one.
Vellicode, Yours faithfully,
20-11-12001. (V.SABARIMUTHU)
A copy of the above letter was sent to prominent leaders of the political parties also by post. A copy was sent to President of India along with the copy of the first letter.
After the receipt of this letter, Dr. M. Karunanidhi, President of the DMK party, said that his party favoured retention of the PSUs by the Government. He wanted the Government to encourage the Corporate Houses to start new ventures to create new jobs.
Mr. Mulayam Singh Yadav, again after the receipt of the above letter, requested the Government to preserve the PSUs by infusing more money into them.
Consistent with the letter, the Government later brought down the lending rates to about 10 per cent.
