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Government shifts privatisation strategy to avoid labour pangs

India plans to jumpstart its faltering privatisation programme by focusing on firms where it expects the least union resistance, an official said on Monday.

"The process is at an advanced stage in several firms like information technology firm CMC, telecommunications giant VSNL and others," the official in the Divestment Department, who did not wish to be identified, said.

"We plan to complete them first and then taken up the labour intensive public sector units later," the official said.

The government plans to raise Rs 120 billion through the sale of stakes in at least 27 state-run firms in the year to March 2002.

The official said the government would first speed up the privatisation of firms with fewer employees. VSNL and CMC are seen as relatively easy to privatise as they do not have the large number of employees typical with most state-run firms. Both companies have only 3,000 employees each.

The official said the strategy shift was prompted by strong opposition from unions and political parties to the recent privatisation of Bharat Aluminium Company.

Nearly 7,000 workers staged a 67-day strike at Balco's plant in Chhattisgarh, demanding reversal of the sale of the unit to private metals firm Sterlite Industries, saying they feared layoffs.

First big privatization

The Rs 5.51-billion sale of Balco was the government's first big-ticket privatisation in a decade of reforms.

"The plan is to stagger privatisation of labour-intensive firms like Hindustan Copper, Hindustan Zinc, National Aluminium Company and others. This would help us minimise opposition from unions to a large extent," the official said.

Hindustan Zinc has about 10,000 employees, while Hindustan Copper has 11,000 and Nalco has 6,500 workers.

The official said this would also give the department enough time to "educate workers and talk to state governments" where these companies are located.

The government has announced several other big-ticket sell-offs this year including its two airlines, Air-India and Indian Airlines, VSNL and other companies.

It is selling a 25 per cent stake together with management control in overseas telecommunications provider Videsh Sanchar Nigam Ltd and plans to cut its stake in CMC to 26 per cent from 86 per cent now.

But opposition from state governments to privatisation of companies in their regions had raised fears of obstacles in the months ahead, the official said.

The chief minister of Chhattisgarh, Ajit Jogi, who belongs to the main opposition Congress party, backed the Balco strikers and accused the federal government of selling the aluminium-maker too cheaply.

Officials said opposition from state governments might deter international and private companies from participating in privatisations.

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