mbition is good. The $5 trillion economy is a nice goal, but the path chosen has to match the goal. Since the April-June quarter of 2019, the economy has been nose-diving. The industry has continuously been bringing to notice the demand plunge. Belated freeing of taxes up to Rs 5 lakh of income was a prudent decision. So was a relief to the corporates. Several other factors and contraction of factory output, job losses, salary cuts and other issues had taken 2019 to a virtual abyss.
It has started reflecting since December 2019, when the government started pruning allocations of various departments. In many cases, during the last quarter, before being hit by corona, the financial situation had turned severe. A stocktaking is needed for taking right decisions and for giving up many projects that are now on offer. People have the wisdom to understand the difficulties and agree for course corrections. A visit to the hinterlands would make it clear how the village elders do such retractions. They say that if you are in difficulty desist from buying ornaments to keep your family happy. It is raw wisdom. The nation must imbibe it. In difficult times, a temptation to sell assets is natural. The process of putting the PSUs on sale reflects that. No family, however, easily parts with their hard-earned assets. The nation has to rethink. The family silver, PSU, has been paying high dividends to help the government sail through difficult times.
PSUs like BPCL need Rs 400 crore to sell but a mere Rs 72 crore to refurbish and rerun. The PSUs have been harbinger of progress with measly investment. The 59th Public Enterprises Survey 2018-19 says as on March 31, 2019, there were 339 CPSEs with a total investment of Rs 16,40,628 crore. The total revenue earned in 2018-19 was Rs 25,43,370 crore. The dividend paid by only seven of these was Rs 21,000 crore. Was this a bad performance?
In terms of giving jobs with living wages, the central PSUs are better than their private sector competitors. They employ 20 lakh people (sustain at least 80 lakh) and give indirect employment to almost equal numbers. The coal, steel, engineering, power and textiles have the largest number of employees.
The PSUs have beaten the private sector in 2017-18 with 8 per cent employment growth. The private sector growth was only 6.3 per cent, says a Care Ratings study of 700 companies. The study noted that overall job growth in the private sector had declined in 2018. The total employment was 4.57 million; of these, 2 million in PSUs. Additionally, the companies with net sales of Rs 50-100 crore, Rs 100-250 crore and Rs 500-1000 crore underperformed and pulled down the overall employment growth.
The development indicates that the slide had started in 2017. However, the country had not taken the developments of 2017 to 2019 in a serious manner leading to almost a crisis situation post lockdown. It has raised a fundamental question of total stoppage of production, functioning and processes since the March 22 janata curfew. Still the unlock period is also marked by several restrictions. The lockdown has not been a prudent decision. An unseemly comparison with neigbouring Pakistan is one such hint. Except for local containment areas, there was no general lockdown. Industrial or economic or official activities were not stopped. Pakistan economy is growing and not as hit as large economies such as the US or Europe or smaller ones like South Africa.
Islamabad interestingly has also received rave reviews from WHO. Its Director-General TA Ghebreyesus says Pakistan is included among the seven countries that the world can learn how to deal with the Covid-19 pandemic. The state must be caring but not to the extent that it jeopardises activities. Many problems including severe job and income crunch today emanate from it.
It has to move beyond it, beyond falling factory outputs, infrastructure investments and less productive investments.
The time is to give up all luxuries, and hold PSUs and the Railways sales on hold. We must give up many euphoric projects that the country does not need. These include the Rs 1.1 lakh crore bullet train; the Rs 862 core proposed new Parliament complex; the Rs 20,000 crore New Delhi Central Vista project; the Rs 29, 560 crore Jewar airport that may cause environmental degradation; the Rs 22,000 crore new memorial projects in Mumbai, and may modify the ecologically sensitive Char Dham project linking in Uttarakhand.