The central government is all set to sell off Bharat Petroleum Corporation Limited(BPCL), in the country’s biggest ever privatization drive. It has invited bids for the sale of its entire 52.98 percent stake in this second-biggest oil refiner.
The bid document released by the Department of Investment and Public Asset Management (DIPAM) has asked to submit the expression of interest for the strategic sale of BPCL by May 2.
But why were the employees union holding protest for months? What does the move mean for the economy? Here are some answers.
The story in brief
On November 20, the government announced that it would sell stakes in several public sector undertakings (PSUs) including BPCL.
Having four refineries in Mumbai, Kochi, Bina in Madhya Pradesh and Numaligarh in Assam, and 14,802 retail outlets, BPCL is one of India’s best public sector company. With its commendable performance, the company had made it to the Fortune 500 list continuously for the past 16 years.
It houses about 12,000 permanent employees and thousands of contract staff. The Centre has 53.29% stakes in BPCL, at present. The company which was awarded the Maharatna status in 2017, has a 24 percent market share in petroleum products marketing in India.
Impacts on the Economy
BPCL had a net profit of Rs 7,802.30 crore in the year 2018-19. It also has a CSR share of Rs 177.94 crore. In Kerala alone, BPCL has spent a total of Rs 24.75 crore in various CSR initiatives with Rs 12.16 crore in the education sector alone. 48182 crores have already been invested in the ongoing projects in this public sector company.
The government is apparently trying to bridge the fiscal deficit by the profit they gain from selling off these firms. But in terms of fixing the gap in the fiscal deficit what India requires is a long term plan. The sale of PSU’s is not a solution to the problems of the economy.
The sudden profit of these firms might help the economy, for the time being. But what this short-sightedness fails to see is that what is at bid is a company that provides a net profit of Rs 2050 crores consistently, each month.
While on one hand, this PSU provides a profit for the government, it is seen that the counterparts in the private sector generally evade paying any tax or they pay a very small amount which cannot be avoided.
The employment issue that would be generated with the sale is also expected to be quite high. It is also not clear as to who would regulate the private parties which would be buying the stakes of BPCL.
At a point when the economy of the country is at its worst in 6 years, what the Government must not forget is the fact that the equity that is being sold now is nothing but the capital invested by India’s taxpayers.