Home / News / India /  PSU bank staff, unions wary of govt’s disinvestment playbook

Union finance minister Nirmala Sitharaman’s announcement that the government is looking to divest non-strategic, state-run firms have raised concerns among public sector bank employees and unions, considering that they are outside the strategic ambit, as articulated in the Union budget.

The Centre’s revamped disinvestment playbook has also resulted in calls for strikes and demonstrations.

In her budget speech, Sitharaman said the government plans to privatize two state-run banks, besides IDBI Bank, and a general insurance company in FY22. She also announced the proposed initial public offering of state-run Life Insurance Corp. of India (LIC), in what would be India’s largest public issue so far.

Bank unions organized demonstrations across the country on Thursday to protest against the move. “The United Forum of Bank Unions (UFBU) is meeting on 9 February at Hyderabad to decide on full-fledged agitation against the proposed privatization of public sector banks," UFBU’s convener for Maharashtra Devidas Tuljapurkar, said on Thursday.

Ten central trade unions had in a joint statement on Tuesday said that enhancing foreign direct investment for the insurance sector to 74%, pushing through aggressive divestments in LIC, and pursuing privatization in almost all profit-making public sector enterprises, while announcing closure of all loss-making units, exposes the Centre’s motives and its inability to create jobs.

This comes in the wake of large-scale unemployment in India over the past few months. Unemployment rate had almost touched 24% in April-May 2020. The business loss that came as a fallout of the covid-19 pandemic also led to millions of workers in formal and informal sectors facing income loss.

“The government wants to spend less on people and its public sector undertaking (PSU) disinvestment moves is a clear indication that it is aimed at outsourcing the running of companies, hiring and labour welfare to non-state parties," said Prem Chand, general secretary of Indian Public Service Employees Union.

“This will lead to several problems. Contract jobs will replace regular jobs and thus reduce employment security and social security. The move will finish workers’ bargaining power and decent jobs as conflict with private ownership means retrenchment," he said.

Sitharaman had said the four strategic areas are atomic energy, space and defence, transport and telecommunications, power, petroleum, coal and other minerals, and banking, insurance and financial services. According to the budget classification, some central public sector enterprises (CPSEs) in the non-strategic space include Hindustan Paper Corp. Ltd, Nagaland Pulp and Paper Co. Ltd, Bharat Pumps and Compressors Ltd, Instrumention Ltd, Braithwaite Burn and Jessop Construction Co. Ltd, and Richardson and Cruddas Ltd.

“We have kept four areas that are strategic where bare minimum CPSEs will be maintained and the rest privatized. In the remaining sectors, all CPSEs will be privatized," the finance minister had said.

The government is expecting 1.75 trillion from divestment receipts for FY22, which will help finance social sector and developmental schemes of the government.

Gopika Gopakumar contributed to this story.

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