Geography Reference
In-Depth Information
Chhatisgarh. The resolution of the BALCO controversy is also illustrative of the
reasons that privatization and other second-generation reforms may ultimately
succeed, albeit in a piecemeal and protracted fashion.
In 2000, the government announced that BALCO had been chosen for
disinvestment. It was to be the first significant sale of a controlling stake in a public
sector unit.
27
A 1997 report of the now-defunct Disinvestment Commission,
which suggested that the government sell 40 per cent of equity in BALCO, was
revised in 1998 in favor of a proposal to dispense with a 51 per cent stake.
28
After
a year of negotiations with interested domestic and foreign parties, the
government finalized the sale of BALCO on 2 May 2001 to the Indian company
Sterlite Industries for Rs. 551.5 crore.
While the negotiations were proceeding, the seven principal labour unions that
are active among the 7,500 workers of BALCO, fearful of labour retrenchment
by the new ownership, lodged their dissent with management and bureaucracy in
the state. In February, the seven unions, opposition political parties, and the
Chhatisgarh Chamber of Commerce joined to form the Virodhi Samyukta Samiti
(Anti-Privatization Front). On 3 March the unions went on an indefinite strike,
calling for a reversal of the disinvestment project. Chhatisgarh Chief Minister
Ajit Jogi, a member of the Congress party, supported the unions vociferously,
although the central government's Ministry of Disinvestment claimed that the
state elite, and Jogi in particular, were consulted during all of the privatization
negotiations.
29
Jogi and the unions leveled three charges against the disinvestment
proceedings.
30
First, the opposition claimed that the value of assets owned by
BALCO, including real estate, equipment, inventory and raw materials, and a
power plant, far exceeded, the price paid by Sterlite. And because the
government sold a controlling interest in the unit, it would be difficult to prevent
the new owners from liquidating assets. That BALCO was debt-free and had
earned profits in recent years also inspired opposition from those who claimed
that the government should be selling enterprises that incurred losses rather than
profitable ones.
31
Second, Jogi claimed that the government did not consult the
state political elite in the negotiations. Third, Jogi alleged that the sale of BALCO
violated constitutional protections of tribal lands. The government took the lands
on which BALCO sits from several villages in 1971, with the specific intent of
being used for public purposes. The sale of those lands to private holders, the
opposition asserted, violated the terms of the initial transfer.
32
The state government of Chhatisgarh filed petitions with the Delhi and
Chhatisgarh High Courts, which the Supreme Court stayed and had transferred to
itself. BALCO workers returned to work in early May, after two months of
strikes and negotiations between Sterlite and the unions that ended with Sterlite
accepting the bulk of union proposals.
33
By September, the output of the plant
had yet to return to pre-disinvestment levels. In December 2001, the Supreme
