The Manmohan Singh government has come up against the wall of leftist opposition on the issue of the disinvestment of Bhel. While government sources say the left was consulted before the decision, and that the move is in conformity with the national common minimum programme, the leftists disagree.

But why are disinvestments in Bhel needed at all? The organization was started because it was felt in 1947 that the country needed an indigenous base for electrical machinery. The J.C. Ghosh committee wanted this arrangement in the public sector. The Heavy Electricals (India) Limited, a transformers manufacturing concern, was established at Bhopal in 1956. Bhel was incorporated in 1964, and its units were established in Hardwar, Hyderabad and Tiruchi with technical assistance from the erstwhile Soviet Union and Czechoslovakia.

In 1974, Heavy Electricals Ltd of Bhopal merged with Bhel. It has earned the distinction of being the only company to have the capacity to manufacture the entire range of power-project equipment ? from boilers to generators. Now it has 14 units with about 43,500 employees.

Old is gold

Its production range now includes generators, turbines, transformers, locomotives and traction equipment for the Indian Railways, pollution control equipment, boilers, heat exchangers, pressure vessels and many other products. It plays a vital role in boosting industrial production ? the indirect benefit, though enormous, cannot be measured in terms of commercial profits to the company.

It is not unusual for socially beneficial concerns to show financial losses. But that is not the case with Bhel. It is making high profits. The net profits after taxes during 2004-05 was Rs 1,004 crore, higher by 53 per cent over the previous year?s. The dividend distributed was 80 per cent. The benefit to the government can naturally be expected to be proportional to its share. As on March 31, 2005, it holds 67.72 per cent of the stake, foreign institutional investors hold 22.74 per cent while the remaining is held by LIC, UTI and others.

Now, the government wants to offload another 10 per cent of its stake, bringing its holding to 57.72 per cent. This sale is expected to bring about Rs 2,000 crore. The proceeds do not go to meet the budget expenditure, but will be put in a National Investment Fund. Seventy five per cent of the fund will be utilized for health and education, and the remaining amount to revive the ailing PSUs.

More promises

Another promise being made to lure the employees and small investors is that 15 per cent of the 10 per cent to be disinvested (1.5 per cent of the tolal) will be given to the company?s employees. The stocks will be split to make them smaller units for the convenience of retail investors.

The government argues that the whole exercise is for the good of the people. Also, it assures that it will never allow the government?s stake to go below 51 per cent of this navratna enterprise. The left fears is that it is a conspiracy to gradually lower the stake.

This part-privatization is not in the spirit of the NCMP, which says clearly that ?the UPA will retain existing ?navratna? companies in the public sector while these companies raise resources from the capital market?.

The left has pointed out that Manmohan Singh had denied on October 28, 2004 that the government had any plans to offload its equity in 35 PSUs. For now, the left can take heart from the fact that it has not only extracted the promise from UPA chairperson Sonia Gandhi that navratna companies will not be sold off, but has also managed to keep the government on its toes.