Disinvestment of PSU not a good idea

PSU give more dividends than private players, but capitalists want to take hold of the nation’s economy.

Public Sector Undertakings have been dubbed as lethargic and unprofitable. The present Modi Government is slowly opening most sectors to private enterprises. However, you will be surprised to know that in doling out profits to shareholders Public undertakings is way ahead of private enterprises.

9 Public Sector Undertakings companies figure in a list of 10 undertakings which gave most dividends

Of the 36 companies which have given more than 3% dividend to their shareholders, 21 are public sector companies. In the top 10 companies which have given the most dividends to the shareholders, only 1 private company finds a place. This by itself proves that Public Sector undertaking besides fulfilling their social responsibilities are profitable and gives handsome returns for the investments.

According to an analysis of the Capitaline database, there are 36 companies that have doled out more than 3% returns to their shareholders and PSU companies account for 21 of these.The top 10 companies are as follows-

Most PSUs have been created with social responsibility. The railways for example highly subsidize fares of lower classes and make the transport within the reach of the poor. However with globalization and the clamour for increasing profitability, often ignore the social aspects and this is the main driving force that is encouraging the sale of PSU to the private players.

Right since the 90s when the call for disinvestment of public sector undertakings started, till 2004 the amount collected through disinvestment of PSU was a measly 2056 crore per year, which is insufficient given the Indian government’s debt ratio.

Private Players don’t pick up sick PSUs with noble intent

The belief that private players will pick up sick PSU with a noble intent to help it become profitable is not correct. The sale of PSU is not done in a transparent manner and there are possibilities that this PSU built painfully with the public money will be given to private players at throwaway prices. For the private players, profitability becomes the Holy Grail and they will turn through every trick in the book including exploitation of the workers. The concentration of a particular sector in the hand of a few individuals will also have undesirable effects.

The biggest example is Reliance which has literally steamrolled all competition with its financial clout and is set to rule sole in the communication sector. Imagine the power such an individual can have on the nation’s economy.

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