<b>XIII LOK SABHA DEBATES, <i> Session II (Winter Session) </i> </b>
XIII LOK SABHA DEBATES, Session II (Winter Session) Friday, December 3, 1999/Agrahayana 12, 1921 (Saka )

Title: Resolution regarding sick public sector undertakings.

16.29 hrs.

(Dr. Raghuvansh Prasad Singh in the Chair)

MR. CHAIRMAN : Now, we will go to item number 26. The House will now take up resolution on sick public sector undertakings to be moved by Shrimati Geeta Mukherjee. Before we take up the resolution for discussion, we have to fix the time for discussion on this resolution. Shall we fix it two hours initially?



"That this House expresses its serious concern over the increasing number of public sector undertakings falling sick and Government's decision to close down 12 such Undertakings resulting in the loss of employment of thousands of workers and employees and non-payment of their wages and allowances and disinvestment of public sector undertakings, including even profit making undertakings, and urges upon the Government to --

(i) stop closure of sick public sector undertakings;

(ii) take steps to revive the viable sick public sector undertakings and formulate a comprehensive policy to improve their functioning;

(iii) review the disinvestment policy;

(iv) make immediate payment of dues of employees; and

(v) frame policies to rehabilitate ousted workforce due to closure."

After the election of the Thirteenth Lok Sabha, and the new Ministry took over, the hon. Prime Minister declared that it is time to take hard decisions. These proposed hard decisions by Shri Vajpayee means implementation of structural adjustments as dictated by IMF and WTO resulting in aggravation of unemployment, no wages or half wages to workers etc. The proposed reforms are actually meant to dismantle the public sector by sale of sick public sector units, by conversion of 24 PSUs into joint sectors, by offloading the Government's stake in profit-making PSUs, including some Navratna companies.

Due to wrong policies followed by the Government, those PSU units which were recommended for revival are not getting funds from the Government, such as IDPL and Tyre Corporation of India. Due to the presence of their second generation economic policies, a major shift has taken place in Government's attitude towards public sector. It is not even considering the fact that the cost of revival of sick public sector units is much less than the cost of implementation of the Voluntary Retirement Scheme. For example, one can mention the cases of eight sick PSUs that were decided for closure, Retirement Scheme in these units is Rs. 517 crore, and the revival package would cost only about Rs. 200 crore, less than half of the total VRS cost.

In Independent India, public sector have succeeded in meeting the objective and laying a strong foundation for the industrial development of the country to a large extent. It is always widely recognised that public sector played a vital role in the Indian economy for what it is today, and has been the main vehicle for its growth. But this sector has been neglected of late, largely starved of adequate investment etc., contributing to reduction of industrial activities, particularly from 1997-98.

Though the public sector units are making substantial contribution to the public exchequer to augment the much needed resources through payment of dividend, corporate taxes, Excise Duty, Customs Duty and other duties, yet the Government is hell-bent to sell out these units to the private sector undermining the national interest.

Sir, to prove the case, one can mention the case of GAIL. In tune with the policy of this Government of appeasing the multinational companies, the shares of GAIL were sold to M/s Enron and M/s British Gas at a discounted price. As the Government has decided to help the MNCs and other foreign companies at the cost of our national interest, even the suggestions of their Ministers are going in vain. Though the Minister of Heavy Industries had suggested that a part of the proceeds of the disinvestment funds should be utilised for re-vamping and re-building the PSUs, particularly the sick PSUs, particularly the sick PSUs, yet nothing towards that end has been done.

Sir, the stoppage of JCI has pushed thousands of workers into the precarious conditions due to lay off, payment of half wages and etc. It has also put the jute growers at great difficulty as they are being compelled to sell raw jute at a price which is below the cost of production. The NJMC having no regular flow of funds from the Government is faced with the danger of its closure. 33,000 workers of Nationalised Jute Mills -- five of them in West Bengal and one in Bihar -- are not getting their wages. The same is the case with M/s Jessop Ltd. in West Bengal where 10,000 workers are not getting their wages.

Sir, another case in point is M/s IDPL. The hon. Prime Minister assured a delegation of IDPL workers, who were accompanied by Central Trade Union leaders and the Members of Parliament from the Left Front, that all the necessary funds would be given to the IDPL for its survival. But unfortunately, in spite of the assurance by the hon. Prime Minister nothing has been done till now. As I said earlier, the workers of IDPL already are not getting their wages for the last three to four months.

Sir, here I would like to sound a word of caution. If IDPL is closed down, a majority of the pharmaceutical industries would go to the MNCs and the cost of life-saving drugs and other drugs would go up to such an extent that even people belonging to the middle class would not be able to afford it, let alone the poor people.

Sir, the Sick Industries Companies Act was enacted with a view to going into the causes of sickness and the measures to be suggested for rehabilitation of the undertakings, both private and public and to check unemployment and foster industrial growth. But experience reveals that in most of the cases, the sick industries are recommended for commencing liquidation proceedings in the State High Courts.

This is being done instead of revitalising them through schemes prepared for their opening through financial institutions and without fixing responsibility of funding on the Central Government and in some cases the State Governments. Although representatives of trade unions extended full cooperation to the Government to execute such schemes, the schemes do not pass through due to the policy of Government of India. This process is a long drawn one during which time workers do not get wages. The employers and the Government do not take any responsibility for workers. Consequently, factories are closed down and sold out through liquidation. During the investigation process, workers or creditors are not permitted under law to proceed with their claims for payments through due course of law under section 22 of the SICA. This means, that workers do not get wages for the entire period of litigations. Thus, BIFR has been made infructuous. This renders SICA meaningless. Therefore, I urge upon the Government to desist from following the policy dictated by IMF, MNCs and WTO and go back to our old policy of really making the public sector strong.

MR. CHAIRMAN : Motion moved :

"That this House expresses its serious concern over the increasing number of public sector undertakings falling sick and Government's decision to close down 12 such Undertakings resulting in the loss of employment of thousands of workers and employees and non-payment of thier wages and allowances and disinvestment of public sector undertakings, including even profit making undertakings, and urges upon the Government to--

(i) stop closure of sick public sector undertakings ;

(ii) take steps to revive the viable sick public sector undertakings and formulate a comprehensive policy to improve their functioning;

(iii) review the disinvestment policy;

(iv) make immediate payment of dues of employees; and

(v) frame policies to rehabilitate ousted workforce due to closure."

SHRI SUDIP BANDYOPADHYAY (CALCUTTA NORTH WEST): Mr. Chairman, Sir, being sworn in the present Cabinet as Minister in charge of Department of Industries we expect cooperation from the Minister's end so far as disinvestment is concerned. Disinvestment is a burning problem at this juncture in the State of West Bengal and also in other parts of India. When Kumari Mamata Banerjee took this matter up firmly with the Prime Minister, he assured in his letter to her that eight Central public sector units -- seven in West Bengal, about which Shrimati Geeta Mukherjee mentioned repeatedly, and one in Prime Minister's constituency Lucknow -- will be dealt with separately on priority.

The Disinvestment Commission was set up in 1996 to look into the problems of various industries. Its tenure has been completed recently. I was going through an editorial in The Hindustan Times about three days back which, under the headline Disinvestment Blues, reads:

"To be fair to the Commission, it worked hard and with sincerity in submitting 12 reports covering 58 public enterprises. It made a careful analysis of each unit and prescribed specific action in each case. Its recommendations ranged from sale to the introduction of strategic partner to outright closure. In most cases, disinvestment was to be accompanied by attractive voluntary retirement schemes and certainly no Government was willing to listen to the Commission or to act on this report."

Whether the report of the Disinvestment Commission should be accepted or rejected is a matter in which a decision has to be taken by the Government. However, the Government should remember that a decision in this matter is directly connected with the fate of lakhs and lakhs of employees, labourers, workers and many many distressed families.

What are the basic causes of the sickness of Indian industries? According to our observation, the basic causes of sickness in the Central public sector units are, low capacity utilisation, equipment deficiencies,

frequent equipment breakdown, aging of the plants, power shortages, industrial relations problems and lack of competitiveness. We have repeatedly pointed out that modernization programmes ought to be implemented.

Sir, the proposal for `Public Sector Modernization Fund' was discussed in the meetings of the Committee on Public Undertakings in their 11th and 12th Reports. The Committee, very categorically, proposed for setting up of `Public Sector Modernization Fund'. So, this Fund should provide financial assistance to the sick public sector units for their revival, restructuring and modernization without any further delay.

But unfortunately, it appears that the present Government is a little bit shaky and fumbling with the proposals as to what to do. We do not know what position they will actually take.

Sir, restructuring is also necessary. There are many public sector units which have very lavish guest houses. Retired IAS officials are placed on the top of many Central public sector units who get their alternative employment after retirement. The Board of Directors are good for nothing. My point is that political appointments normally cause damage to the development so far as the Central public sector units are concerned. In different units, this practice is going on. In one unit there is no need of putting Chairman and the Managing Director both together. You can take technocrats there who are experienced in that field. They can be placed at the head of our Central public sector units. So, all these matters are to be dealt with firmly.

Sir, this is for the Government, which has taken oath of office recently, to see that this apprehension is precipitated, that if disinvestment will be there in the name of Voluntary Separation Scheme or Voluntary Retirement Scheme, many people will be retrenched from their concerns, many units will get closed down. Take for example, the case of Tea Trading Corporation of India. Its employees are not being paid their salaries for the last 20 months.

Similarly, Shrimati Geeta Mukherjee also mentioned certain names of the sick units, and I do not want to repeat them. Now, take for instance, the Tyre Corporation of India. This morning I received a fax message from them about the revival of industrial rubber division of Tangara. It has two units --- one at Kakinada and the other in the city of Calcutta. The said that one of the units of the rubber products division which is running smoothly is going to be stopped.

Similarly, there are so many units which are facing serious threats of closure. Labourers and workers are genuinely frustrated and disappointed. They are, all passing their days with anxiety.

That is why we request the hon. Minister to try and provide more funds to these institutions.

There was one point made, which I fully agree, that the total amount required for the survival of the sick units is less than the total amount to be required for the VSS and VRS. If it is a fact, why not a parliamentary committee be formed to look into it? Why not the Central trade union leaders be given a call for discussion in details to see as to what their proposals are, how they are looking into the matter?

The question of workers and employees in the management is still pending. Without deployment or appointment of many Members in a Board, if any representative from the workers of these units can be sent to the Board of Directors, that will be more beneficial.

Sir, in this regard, an assurance was also given by the hon. Prime Minister to our leader Kumari Mamata Banerjee, not once but twice, in writing. I hope, the copies of that letter are there with the hon. Minister.

We want a clear and categorical assurance that these Central Public Sector units will not be allowed to close down. At least, an effort has to be made by the Government in this regard. The previous Governments at the earlier stages had caused damage to these institutions. So, sufficient efforts are to be made to see that the units get revived and we are sure that if an honest effort is made, the Central Public Sector units can at least give some positive direction by which other units can be benefited. We seek your blessings, good wishes and support so far as the revival of these units is concerned.

SHRI PRIYA RANJAN DASMUNSI (RAIGANJ): Sir, this is a subject which is perhaps discussed years after years in this House. Even the Members have become sick discussing the sickness of the industry. I am grateful to Shrimati Geeta Mukherjee for having brought this very important matter which is related to the interest of large section of the workmen of our country, namely, large scale, medium scale and small scale. I will only submit to the hon. Minister through you a few important aspects. I have had the privilege to represent two constituencies of West Bengal earlier, one which was earlier known to be the Sheffield of India at the dawn of the national struggle, Howrah, before that Calcutta South. Sickness is not merely because of modernisation. Sickness is precisely of three aspects. I have gone deep into the issue. First, the unit which is to manufacture A or B item, whether that has a potential market; and (b) the unit which is to manufacture A or B item, for that whether the raw materials were available in abundance and at least at reasonable price; and (c) the manpower deployed in the unit was commensurate with the total expenditure of the unit. These are the first causes we have studied in the respective units. When the revival package of respective units is placed before either the Union Government or the State Government, we have observed one interesting theme which I would like to bring to the notice of the Government.... (Interruptions) I would give to the hon. Minister who has

assumed charge of this department, a classic example of one unit of West Bengal, called Hoogly Dock Shipyard. It is a unit having tremendous skilled manpower, having the potential not only to repair, but to manufacture ships, having the potential from early days to make the kind of vessels which even Mazagaon Dock could not conceive of, in early 50s or 60s. These units were nationalised at the time of late dear Indiraji. These units, with the concurrence of the Government, submitted three revival packages and all the revival packages including (a) capital support; (b) raw materials cost production support; and (c) specific direction for reduction of manpower. The management both in the Unit and the Government gave first priority to reduction of manpower which was done at the first stroke. After that, the support of the revival package was delayed for decades thereby compelling the units to become not only sick but to die.

There are umpteen number of instances where the manpower reduction clause is first implemented and then the financial package for revival is taken up. I am not talking about the parties in Government but I am only mentioning that the whole system of the Government is functioning in this pattern. Thus, at the end, the units die.

I will give a second classic example to the hon. Minister. This is the case of a unit called National Instruments. My friend and brother Shri Sudip Bandyopadhyay will also be knowing this. This unit was reputed not only for its glasses but also for infra-red light equipment. During a war, after sunset, when night falls, if you have to operate with a tank in a jungle, you have to look at the enemy's position with a red light called infra-red light.

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That unit's revival package was

endorsed by the Government not once but five times and it was not implemented.

I will give another glaring example of an important case of a company called India Machinery which is no more there. That unit survived till about October, 1990.

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