Centre to privatize RINL despite union resistance

Finance minister Nirmala Sitharaman on Monday said that the Centre has decided to privatize Rashtriya Ispat Nigam Ltd (RINL) despite opposition from both the Andhra Pradesh government and the workers’ unions of the steel plant.

“Strategic disinvestment of government of India’s equity will lead to infusion of capital for optimum utilization, expansion of capacity, infusion of technology and better management practices. This will result in higher production and productivity and expansion of direct and indirect employment opportunities,” Sitharaman told the Lok Sabha on the RINL plan.

Responding to a question on whether the Centre has taken into account the impact on all stakeholders, including the possibility of job losses, Sitharaman said while deciding the terms and conditions of the strategic sale, legitimate concerns of the existing employees and other stakeholders will be suitably addressed through appropriate provisions made in the share purchase agreement.

The finance minister also made it clear that the state government has no locus standi to oppose the move or offer support to revive the project, considering that it does own a stake in RINL.

“However, the state government is consulted in specific matters, as and when needed, and their support is also solicited in the matters that require their intervention,” the minister said.

On 27 January, the Cabinet Committee on Economic Affairs had approved 100% divestment of the government shareholding in RINL, also known as Visakhapatnam Steel Plant (VSP) or Vizag Steel, besides RINL’s stakes in its subsidiaries and joint ventures via strategic disinvestment by way of privatization.

Andhra Pradesh observed a statewide bandh on Friday in response to a call by the VSP workers’ unions, which was supported by the Y.S. Jaganmohan Reddy-led YSRCP government. Most political parties in the state, barring the BJP, supported the bandh.

The Centre has set itself an ambitious divestment target of ₹1.75 trillion for FY22 after failing to complete any big-ticket privatization exercise in the current fiscal year due to covid disruptions. For FY21, it has pared down its divestment target from the budget estimate of ₹2.1 trillion to ₹32,000 crore.