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No need to sell this family jewel

It is exceedingly unfortunate that the government has decided to sell a 5.82 per cent stake in the Steel Authority of India Ltd, (SAIL), a sale which is likely to raise Rs 1,600 crores for the government. This seems to be yet another case of the government selling the family silver. The government seems to be going ahead with a disinvestment policy on which there is no consensus in the country. SAIL is no ordinary corporation but is India’s largest steel producing company with a turnover of Rs 50,348 crore. The company earned profit before tax of Rs  5150.87 crore and profit after tax of Rs 3542.72 crore for the year 2011-12. SAIL is thus a profit-making public sector unit and there is no pressing need to disinvest in it.  It is among the maharatnas of the country’s central public sector enterprises, which means that its performance has been outstanding for a number of years and has been repeatedly commended.  Selling equity in SAIL will not necessarily improve its profitability or its performance and can have the effect of taking steel, which is at the commanding heights of the economy, out of the control of the public.

It may be true that some structural reform measures may be necessary to improve the efficiency of the economy and increase its international competitiveness. This may well mean removing the rigidities in the various sectors of the economy. However, selling equity in SAIL is not the best way of going about doing this. Instead the government should have considered sticking to and improving the various other factors in the economic system that are a drag on it. Public sector units, which are not performing well, need reform and do not necessarily require to be sold. They require to be more efficiently managed. The public sector was built up by investing a huge amount, but also with the sweat and blood of lakhs of people. The public sector units have strengthened the base of our economy. They have paved the way for industrial development and of self-reliant economic development.  They have strengthened our defence forces and have developed the infrastructure. The gradual privatisation of strategic and vital industries is against the national interest. Besides, the privatisation of profitable firms will lead to a huge loss to the national exchequer in the long term. The government should therefore reconsider its policy of selling equity in SAIL.
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