Nineteen years ago the then Union Minister Prakash Goyal signed the file approving the privatisation of the country's largest shipping company — the Shipping Corporation of India (SCI). Now this year, if all goes well with the privatisation attempt, Piyush Goyal, his son, as the Union Commerce and Industries minister, would vote for approval of SCI's sale in the Cabinet Committee on Economic Affairs.
Like all files on disinvestment, the proposal to sell off the government's shipping business has had a difficult passage starting with Ved Prakash Goyal as the departmental minister in the Atal Bihari Vajpayee Government approving the sale of majority stake in the SCI to Indian or foreign companies. After many false starts and nearly two decades later, the Narendra Modi Government has decided to finalise this monsoon the sale of the largest company ferrying oil, coal, fertiliser and foodgrains. Piyush Goyal, as the key economic minister in the present central government, would be voting for the approval of the final bid.
Like the sale of the more high-profile Air India, the SCI sale was pushed hard by Vajpayee and his disinvestment minister Arun Shourie as both strongly felt it was the government's business not to be in business. Shourie had persuaded reluctant Shipping minister Ved Prakash Goyal, whose ministry officials opposed the sale, to agree for privatisation. After Vajpayee spoke to Goyal about the Bharatiya Janata Party (BJP) government's privatisation philosophy, the Shipping minister concurred for the sale. By the time the file got approvals from the finance and law ministries, the then Maharashtra Government had said it objected to handing over the SCI corporate headquarters in Mumbai, situated opposite the Mantralaya, which is the state government secretariat, to a private company.
As there was a change of chief minister in Maharashtra, a deal could not be clinched and then general election arrived (in 2004), which Vajpayee lost.
The ten years of Manmohan Singh Government (2004-2014) saw opposition to privatisation come from multiple directions. The Left parties, which had given outside support to Singh's United Progressive Alliance regime for the first four years, had vetoed all proposals to hand over the government companies. Within the government, the left-leaning ministers like Arjun Singh, Mani Shankar Aiyar and Vayalar Ravi opposed. The key partner DMK, which controlled the Shipping portfolio, also was opposed to the sale of ports or shipping companies.
However, the UPA term also saw the growth of many private shipping companies as the demand for bulk commodities went up which meant expansion of older companies and establishment of new ones. But despite the competition, the SCI to which two more nationalised shipping lines were added by Indira Gandhi and Rajiv Gandhi governments has remained the largest, with a fleet of 35 big vessels, and an annual turnover of Rs 24,000 crore.
Even though Modi's finance ministers Arun Jaitley and Nirmala Sitharaman were keen to push privatisation so that the government got much-needed funds for its expenses on welfare and security measures, the global markets have not been receptive. The latest reason for extension of deadline for bids has been the invasion of Ukraine by Russia, which has affected the global supply chain, coming soon after two years of pandemic-related slowdown. But companies which had shown interest in the profit-making shipping line, unlike Air India which was burdened with huge debt and recurring losses, are sticking to their interest. However, the government has to scale down its expectation from the sale of the company, where divesting two-thirds of government share will fetch only Rs 4,000 crore, since much of the ships and oil tankers have been in service for long.
A much-needed rectification
The BJP in its earlier incarnation as the Bharatiya Jana Sangh had strongly opposed the nationalisation policies of the Congress under Jawaharlal Nehru and his daughter, and had reiterated that there would be privatisation when the right-wing party came to power. The Jana Sangh also said its supporters owning jute, textile, shipping and coal industries had been targeted by the Congress just because they supported the former. Thus when the BJP-led National Democratic Alliance (NDA) got majority in 1999, it became an article of faith for Vajpayee and he started the Department of Disinvestment, starting with the privatisation of top bread manufacturer Modern Foods India Limited.
Modi has also been adhering to the same economic philosophy and as the BJP has absolute majority in the Lok Sabha for the last seven years, it has been trying hard to trim the public sector sharply. With the end of the pandemic, Sitharaman, who heads the Department of Privatisation, has launched the dilution of government of shares in LIC; has seen off sale of Air India; and is now the Shipping Corporation of India is set to get into private hands.