1.0 The  background
1.1  The public sector was a product of about twenty years of thought and discussion, most of it as subjects of a colony, dreaming of what kind of development India  should have. The second world war and its devastation of the economies of the west and the ideology of the then Soviet Union came in handy since it made possible access to technology. India embarked on a national development programme; and the State took on the responsibility to build not only  infrastructure but also the capital goods industry, the like of which no developing country had attempted, justifiably so since India was the size of a sub continent and therefore a very large potential market. The terms on which India was granted independence and the compulsions politics made it imperative that the development model be capitalist.

1.2  Capitalism cannot be built without capital, therefore the public sector was made to subserve the growth of the private sector by underwriting it with cheap infrastructure and  capital goods. This was done by a careful balance of external borrowing and domestic savings. India was a prudent borrower. However, the crisis of the economies of the west as well as within India, including its wars with China and Pakistan let to constant and repetitive crises in external payments. The solution found by Rajiv Gandhi was to resort to commercial borrowing, very often using the public sector. As a result India went in for a period of profligacy since the mid-eighties by seeking to speed up the rate of growth through short term external borrowings. External borrowings from foreign commercial banks went up from a meagre $313 million in 1980 to $12,000 million by the end of the Rajiv Gandhi era in December 1989. The problem of indebtedness is a historic one. As of now, per capita internal debt is Rs.5,377 and the external debt per capita is Rs. 3,783, while the per capita net national income is no more than Rs. 521 per month. Fianacing growth through borrowing or foreign savings rather than current savings has led to this situation. As a result  either consumption must be reduced or national assets built up in the past, by the previous generation, must be sold.

1.3  The Indian elite cannot reduce their consumption. Their solution to the indebtedness was a systemic surrender to the creditors represented by the World bank and the IMF. In the 1980’s the World Bank began its adjustment lending—cash payments designed to ease balance-of-payments problems during economic policy reforms. In reality, governments have used most World Bank Structural Adjustment loans to repay their debts to the commercial banks, using up funds that might have been used for national development. At the same time the  compulsions of competitive politics make it imperative that the policies remain populist. To this must be added the lure for large scale corruption an essential ingredient  in parliamentary democracy.
1.4  Another important fact that must be understood is that the World Bank is not an international organisation, but a partisan organisation, dedicated to serve the interest of the owners at the cost of the poor countries. This is quite obvious if one looks at the following data:
· The world’s ten richest nations hold 54 percent of World Bank votes, with the US alone controlling 17 percent. These ten nations represent less than 20 percent of the world’s population. In contrast, 48 Sub-Saharan African nations have five percent of the World Bank votes.
· For every taxpayer dollar invested in the World Bank by the UK Government, UK companies receive $1.85 in procurement contracts to carry out World Bank work. In France, every dollar invested in the bank brings French companies $1.82; in the US $1.80; Germany, $1.51; Japan $1.01. (source: US Treasury secretary Lloyd Bentsen testimony to Congress).
· Documentary evidence of the history of Structural Adjustment Loans granted by the World Bank to developing countries is replete with evidence of total failure of the programme in getting the borrowing  countries out of  crises, and continued, if not accentuated poverty.
2.0   Disinvestment
2.1  The economic reforms with respect to the public sector since 1991 need to be examined against this background. The politics of populism restricted the Government from taking hard decisions in the matter of reducing consumption expenditure and unwarranted subsidies. The pressure of the World Bank and the World Trade Organisation rendered  reductions in customs duties an imperative which implies a corresponding reduction in excise duties. The net of direct taxes in any case was very narrow and tax evasion, with political patronage was and is rampant. The only solution then was to disinvest the shares in the public sector  as a non inflationary measure.
2.2  The fraud in the first two rounds of disinvestment are too well documented to require repetition. What, however, needed is a closer examination  of disinvestment, with reference to the objectives of the public sector which remain unchanged, for political reasons, inspite of the reforms. The most obvious contradiction is with respect to the objective  "to prevent/ reduce concentration of private economic power".  Disinvestment has been (for very obvious reasons) restricted to the most profitable and critical enterprises, which defeats the other objective namely  "to generate investible resources for development by earning suitable returns. " The emasulation of the public sector as an instrument of policy defeats the other objectives such as "to create employment opportunities and promote balanced regional development".
2.3  Far more serious is the implication of  disinvestment in regard to the objective "to build infrastructure for economic development and promote rapid economic growth and industrialisation of the country." The public sector in fact performed best in achieving this objective. For example, in the energy sector, which has the highest multiplier effect,  the public sector  built the basic infrastructure for cheap and reliable energy resources. In doing this, the public sector had  dismantled the stranglehold of the international oil cartel, which is well documented. This was achieved not by waving a  political magic wand but by setting up ONGC and the Indian Oil Corporation and giving the international oil cartel stiff competition. Since the refineries of the cartel companies had aged, the cartel found it more expedient to get their enterprises nationalised rather than invest. The inability  of the private sector to invest into  capital intensive industries like coal and power led to their nationalisation. Power was extended beyond the city limits and became one of the mainstay for food security of the nation. It did not stop there, the public sector set up the basic capital goods industries that would sustain the growth  of the energy sector by providing capital goods at very low prices. It is precisely the need to break this self sufficiency that the World Bank has targeted its policies for India.
2.4   The Indian Public Sector units have been rendered vulnerable with a plethora of policy measures that would put a colonial government to shame. For example, while BHEL supplies equipment and NTPC provides power they are not assured payment but foreign competitors like General Electric and Enron are given guarantees and counter guarantees; in regard to tariffs and profit remittances. Oil companies are forced to sell in their official outlets lubricants in competition to their foreign competitors lubricants; while ONGC has tom sell oil at Government determined rates, the foreign companies are allowed higher international prices; public sector telecom companies are debarred from bidding for basic and value added services while foreign companies including foreign public sector are allowed concession after concession. The list of this form of  type of colonial discrimination is endless and increasing every day.  In addition to weakening these units, their shares were sold at throw away prices.
2.5 Take the case of BHEL shares, they were sold at a meagre  price of Rs. 80 less than three years ago and inspite of  a virtual collapse of the share market during the interregnum the price quoted today is Rs.375. This is without any fundamental change in the organisation or its performance. There is a cornering of shares by the  foreign financial institutions and other MNCs fiduciary  agencies. Having obtained a foothold as the single largest shareholder other than the Government (say 20- 26 %), the Government can be persuaded, due to tight fiscal policies, not to contribute to subsequent share issues by the enterprise either to increases the share capital or by way of  bonus shares. (Even this long winding procedure would not be required, if there is a Mexico type collapse)  Given the global market, the access to funds and the superiority in technology, even a 20 % equity is sufficient to force policy decisions. The Disinvestment Commission has specifically recommended  that "Government should, in the interest of efficient management, enable election of Directors who would represent the minority shareholders in the PSUs." A position in the Board for a competitor is enough to `creatively destroy’ the enterprise as a national enterprise. It is worth repeating that the energy sector is capital and technology intensive.

2.6  Perhaps, the most cynical move, on the part of the agents of the World Bank and MNCs in the bureaucracy and politics, is to seek a paltry loan of Rs. 1.5 Crores for the Disinvestment Commission from the World Bank (thus giving it a foot hold on its operations and decisions).
 
3.0 Emasculating the public sector enterprises.
3.1  Public sector’s ability to trade the domestic market for technology - as was the case with BHEL, ITI or any of the technology intensive units - is being taken away by a reckless opening of the market. Budgetary support is being withdrawn, lending by financial institutions have not increased from no more than 15 % for public sector (only the share of multinational sector in the private sector has increased); Government prefers to disinvest rather than allow the enterprises to raise fresh equity. Thus the enterprise’s ability to acquire technology and finances is being weakened.  The weakening of these enterprises is allegedly for the purpose of making them more efficient and competitive. What is the strength of the competitor ?
3.2  A study which placed the GDPs of nations and turnover of MNCs indicated that Of the 100 largest economies in the world, 51 are corporations; only 49 are countries. Mitsubishi is the 21st    —largest economy in the world after twenty nations (India being the 16th). Wal Mart  the number 12 corporation--is bigger than 161 countries, including Israel, Poland and Greece. Mitsubishi is larger than the fourth most populous nation on earth: Indonesia. General Motors is bigger than Denmark. Ford is bigger than South Africa. Toyota is bigger than Norway. The combined sales of the world's Top 200 corporations are far greater than a quarter of the world's economic activity. The Top 200's share of global economic activity has been growing rapidly over the past decade. In 1982, the Top 200 firms had sales that were the equivalent of 24.2 percent of the world's gross domestic product (GDP). Today, that figure has grown to 28.3 percent of world GDP. The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 9; that is they surpass the combined economies of 182 countries. At latest count, the world has 191 countries.  If you subtract the GDP of the big nine economies -- the United States, Japan, Germany, France, Italy, the United Kingdom, Brazil, Canada and China -- the combined GDP's of the other 182 countries is $6.9 trillion. The combined sales of the Top 200 corporations is $7.1 trillion.
4.0 Replacing `import substitution industrialisation’ by `export oriented industrialisation’.
4.1  Another important objective of the public sector was and continues to be "to create a self reliant economy through the development of local industries for import substitution and by encouraging and promoting exports."  This objective is sought to be dismantled by replacing import substitution industrialisation  by export oriented industrialisation. The most important ingredients for this recipe are devaluation and the dismantling of the protectionist barriers, replacing all economic legislation and policies with those tailored to attract foreign investments.  What is important to note is that our trade balance continues to be in substantial defecit after six years of economic reforms.
5.0 Radical changes in  legislation.
5.1   Not only are economic laws, like those related to banking, telecommunications, civil aviation, power etc,. being changed without any serious debate, but in the interest of liberalisation they are even being violated. For example when the Secretary, Dept.  of  Civil Aviation was questioned by the Parliament’s Standing Committee on Transport & Tourism on about the violation of law (in following the open sky policy, without amending the Air Corporation Act 1953) stated, "How does one know about it in the Ministry unless the facts are brought out that somebody is violating law" and this after informing the committee that "a conscious application of mind reduced to writing was not there" in response to a question of the implications of  open skies policy on a statutory corporation the Indian Airlines.
6.0   Retaining the loss making units.
6.1   The Disinvestment Commission  states, "selling government equity at the best price in profitable enterprises, as this alone may not provide long term budgetary benefit unless the question of recurring budgetary support to loss making PSUs is also addressed" The track record of the last six years of reform is "privatisation of profits, and nationalisation of losses". While great dispatch has been shown in selling profitable undertakings, not a single PSU has been liquidated, restructured or revived.   There is no seriousness about the revival of sick units. Even where revival schemes are approved, funds are not released as per the scheme. Many of the sick units do not even have a duly constituted management, some are being managed on a part time basis by Joint Secretary to the Government, while some have retired personnel on extended contracts.

7.0   Marginalising the management.
7.1   While the slogan that of  is providing autonomy to the enterprise management, increasingly the role of management is being taken away from management,  and a number of  independent agencies are now  taking decisions in an uncoordinated  and piece meal manner. For example, the Disinvestment  Commission, the BIFR and the operating agencies, the various administrative ministries, the department of public enterprises, the Parliamentary Committees etc. All these agencies intervene in the functioning of public enterprises, without the enterprise managements having any say in regard to vital issues. The most vital issue of  labour costs is outside the purview  of the enterprise management. Through a gazette notification the Government has appointed a Pay Committee headed by a retired Judge of the Supreme Court to decide the salaries of the managerial and supervisory staff and the Directors of the PSUs.

8.0  Lies and damn lies.
8.1   For public consumption the Disinvestment Commission states the following as the long term  Disinvestment  startegy

Strengthen PSUs
· Strengthen profitable PSUs to promote greater competitiveness and profitability to enable payment of higher dividends to the Government and enhance share values
· Sterngthen other marginally profitable PSUs and reduce their future dependence on the budget
· Financially restructure and revive loss making PSUs to invite private capital for long term turn around

The National Confederation of Officers Associations of Central Public Sector Undertakings, a representative body of  more than one and half lakh officers, (the author is the President) would willingly give a sworn affidavit that the policies of the last six years of reform have done just the opposite to what is stated above.  Even the simple question of what should be the Government and Parliamentary control in a situation of multiple ownership has not been enumerated. A telling example of this would be MTNL, out of the 65,700 workforce, the total number of employees on the roles of the enterprise are 64. The rest are employees on deputation from the Department of Telecommunications, with cadre control vested in the Department and not the enterprise. Yet the Government has sold of  a substantial amount of equity.

9.0 Conclusion
9.1   The public sector enterprises were set up for and sustained by certain stated policy objectives. While the political system does not have the courage to state that the objectives have changed, the combined might of international finance capital and the ruling elite in India is ensuring that all  the objectives are subverted. The subversion of these objectives would  undermine the economic sovereignty of the nation since they would remove the levers of control over the economy from the Government to MNCs and their home governments. History  testifies that the loss of economic sovereignty progresses to a loss of political sovereignty.  Only this process would lead to `colonisation without occupation’  achieved through a process of autocolonisation by the ruling Indian elite.