Acceleration of Privatisation and Concentration of Capital
Prime Minister Modi, while announcing a Rs. 20 crore package on 12th May, gave a call for “Aatmanirbhar Bharat Abhiyan” or Self-Reliant India Movement. By the time all the details of the package were announced, the actual meaning of this slogan became clear. It means that workers, peasants and small enterprises must fend for themselves, without expecting any help from the Central Government, which will only take care of big business interests, Indian and foreign.
The Prime Minster called for turning the crisis into an opportunity. The details of the package show that what he meant was to turn the pandemic crisis into an opportunity for increasing the domination of the economy by Indian and foreign monopoly capitalists, by destroying competition from smaller enterprises, accelerating privatisation and opening up new sectors for penetration by private monopoly companies.
Announcing the details of the package, the Finance Minister claimed that Rs. 3.7 lakh crore was directed towards micro, small and medium-scale enterprises (MSME). According to the new definition she announced, these are enterprises with investment less than Rs. 1 crore and turnover less than Rs. 5 crore (micro); investment of Rs. 1-10 crore and turnover of Rs. 5-50 crore (small); and investment of Rs. 10-20 crore and turnover of Rs. 50-100 crore (medium).
The assistance package consists entirely of new bank loans which MSMEs can get without mortgaging their assets, and whose repayment is guaranteed by the government. However, the amount of unpaid dues to such enterprises from government departments and public sector enterprises is estimated at over Rs. 5 lakh crore. In addition, there are also unpaid dues to be received from private companies and pending wages to be paid. In the absence of any immediate cash grants, the majority of MSMEs will inevitably be forced to close down.
Far from actually helping MSMEs to resume operations, the package paves the way for Indian and foreign monopoly capitalists to increase their market share in sectors where they compete with MSMEs. For instance, MSMEs enjoy 90% market share in textiles and 70% in readymade garments at present. This is bound to fall drastically, for the benefit of the Raymond Group, Bombay Dyeing, Aditya Birla group, Welspun group and the American multinational Page Industries. The 90% share of MSMEs in retail trade will come down, paving the way for rapid expansion of Mukesh Ambani’s Reliance Retail, the Tata group’s Trent, Raheja group’s Shoppers Stop and Biyani group’s Future Retail.
A major privatisation thrust is planned in coal, minerals, defence, airports and electricity distribution sectors. The only sectors which were so far not open to capitalists were atomic energy and space. They too will now be thrown open to them. A major change in the policy for public sector undertakings (PSUs) is planned. Strategic sectors will be identified where public sector enterprises will be allowed to remain along with private enterprises. In all other sectors, PSUs will be privatised. In strategic sectors, at least one enterprise will remain in the public sector while private companies will be allowed to expand. Not more than four PSUs will be allowed in any strategic sector; others will be privatised/ merged/ brought under holding companies. Public sector banks will be most affected by this new policy. It will lead to privatisation of some of them and merger of the rest into four banks.
Commercial mining of coal will be introduced by allowing any party to bid for coal mines and to sell coal in open market. There will be no eligibility conditions. About 50 coal mines will be offered immediately to private companies. Private companies will also be allowed to carry out exploration of new mines and subsequent production. So far, coal mining by private companies was allowed only for captive use. Both Indian and foreign monopolies have been interested in investing in coal mining, given that India is the second largest coal consumer in the world. Commercial mining of coal will also the first step towards privatisation of Coal India Ltd, one of the largest employers amongst PSUs.
Private sector participation in exploration and production of minerals is planned to be increased by giving exploration, mining and production licenses together. So far, exploration and production licenses have been given separately and for a definite period of time. Now 500 mining blocks would be offered through an open auction. Aluminium industry will get additional incentive by auctioning bauxite and coal mines jointly. Aditya Birla and Vedanta groups have major interests in the aluminium sector. Another major concession offered to minerals industries is the removal of distinction between captive and non-captive mines, so as to allow transfer of mining leases and sale of surplus unused capacity.
The participation of Indian and foreign capitalist companies in weapons production is planned to be given a big push by notifying a list of weapons/platforms whose import will be banned. A separate budget provision will be made for domestic capital procurement. At the same time, the limit for foreign direct investment (FDI) in the defence manufacturing under automatic route will be raised from 49% to 74%. Foreign arms manufacturers are being encouraged to form joint ventures with Indian monopoly capitalists. Tata, Adani, Anil Ambani, L&T, Bharat Forge groups have been gearing up to be major producers of defence equipment.
The privatisation of airports is proposed to be accelerated by offering operation and maintenance of 12 more airports on Public-Private Partnership (PPP) basis. 6 airports have already been privatised last year.
Privatization of power distribution will be given a fillip in all Union Territories. The experience from these territories will be used to provide a model for privatisation of distribution companies across the country. A major change is planned in fixing electricity supply rates. All subsidies are planned to be reduced, which will raise rate of electricity for most people. At the same time, surcharges on industries will be removed, to bring down the rates paid by the capitalists. These changes are proposed to be carried out by amending the Electricity Act of 2003. A draft of the amended bill has already been brought out.
The space sector will be opened to private companies by allowing them to use ISRO facilities to improve their capacities in space technology. Future projects for planetary exploration, outer space travel, etc. shall also be open for the private sector.
In case of atomic energy, the entry of capitalists is planned by setting up a research reactor in PPP mode for production of medical isotopes which are used for treatment of cancer and other diseases. Capitalists will also be allowed to set up facilities in PPP mode to use irradiation technology for food preservation.
Another major concession announced for big capitalists is related to the Insolvency and Bankruptcy Code. No new bankruptcy action will be taken for one year against companies defaulting in repaying their loans. Further, if Covid related loans are not repaid they will be not be considered defaults. This is bound to result in increase of NPAs and losses for banks, which will be shifted on to the backs of the people through further government spending to recapitalise banks. The government also acceded to requests of the big capitalists to amend the Companies Act so that violations are not considered as criminal offences.
It is clear that the Atmanirbhar Bharat Abhiyan package will lead to further concentration of the means of production in the hands of Indian and foreign monopoly capitalists, destruction of large number of MSMEs, further increase in unemployment and further bank loan defaults.