The economic reforms programme of India’s ruling coalition was dealt a crippling blow last week when a key Tamil Nadu ally threatened to pull out of the government if any stake in the Neyveli Lignite Corporation (NLC) based in the southern state was divested.
The Dravida Munnetra Kazhagam’s (DMK) arm-twisting put Prime Minister Manmohan Singh’s United Progressive Alliance government under tremendous pressure and he immediately decided to put all proposed divestment plans on the back burner.
The common minimum programme of the UPA government talks about not divesting profit-making PSUs. However, after discussions with its allies and with a view to giving a boost to the economic reforms process, the Union Cabinet decided to sell 10 per cent of its stake in the NLC as a part of its divestment drive.
This led to considerable opposition from the PSU’s employees. The DMK-supported trade union, Labour Progressive Front, the largest trade union at the NLC felt betrayed.
Also unhappy were other allies of the ruling Congress party, the Pattali Makkal Katchi (PMK) and the Left parties and their trade unions.
When asked where was the DMK when the Union Cabinet took its controversial decision, T K S Elangovan, organising secretary of the DMK, told rediff.com that two DMK ministers were out of the country at the time and another minister was attending an official function.
But the DMK had earlier supported the NLC divestment plan.In 2002, when the DMK was part of the BJP-led National Democratic Alliance at the Centre, the government had planned to divest its stake in the NLC but this was opposed by the employees who went on an 8-day strike. At that time, the DMK’s archrival, the AIADMK was the ruling party in Tamil Nadu.
Although the trade unions expressed their displeasure and threatened to agitate, the DMK, now ruling Tamil Nadu, did not make much noise.
So, the disgruntled workers decided to go on a strike. Thus 11,000 workers, 5,000 engineers, 3,000 non-executive staff, 12,000 contract workers, and traders and shopkeepers of the mining town began an indefinite strike from the July 4.
It affected the supply of power to Tamil Nadu, Kerala, Karnataka, Andhra Pradesh and Pondicherry. Many rural areas too were affected by power cuts following the strike.
On the morning of the day the strike started, Tamil Nadu Chief Minister M Karunanidhi wrote to the prime minister again asking him to shelve the proposal. However, there was no response from the prime minister.
It was then that M Karunanidhi issued a statement that if the central government could not resolve the issue, and since the decision taken by the government would be binding on the party, the DMK did not want to be a part of the government.
Elangovan stressed that at no point did the DMK threatened to withdraw support to the government as was reported in the media.
“The Cabinet decision was not in the interest of the labourers. That is why we just wanted to remain away from the government,” Elangovan said. However, he said that the DMK would “continue to support the UPA government, like the Left parties do, from the outside.”
M Karunanidhi wrote in his letter to the prime minister that “some disgruntled elements are trying to instigate violence. Any time that may turn out to be a grave law and order problem. The situation in the NLC is becoming serious day-by-day and the opposition is trying to exploit the situation. The continuation of the problem may result in the total break down in the supply of electricity, not only to Tamil Nadu but also to entire south India.”
After meeting key ministers Premier Singh decided to withhold the entire process of divestment.
So, what will happen to all the divestment plans?
“It is just kept on hold, not abandoned. We will insist that the government divest only the loss-making PSUs. We have no objection to that. We are not against divestment per se; we are only against the divestment of the profit-making PSUs,” Elangovan told rediff.com.
NLC, located in Neyveli - around 197 km south of Chennai - is the largest lignite mining and lignite-based power generating company in India.
The history of the NLC dates back to 1828 when ‘peat,’ a low calorific fuel of the coal family, was found near Point Calimere.
Today, it is one of the Navaratnas, a profit-making PSU, that earns the state Rs 1,000 crore (Rs 10 billion) every year, after expenses. It has mines and power stations and other facilities worth Rs 46,000 crore (Rs 460 billion). It employs 19,000 people and supplies southern Indian states 2,490 MW of power.
The Dravida Munnetra Kazhagam’s (DMK) arm-twisting put Prime Minister Manmohan Singh’s United Progressive Alliance government under tremendous pressure and he immediately decided to put all proposed divestment plans on the back burner.
The common minimum programme of the UPA government talks about not divesting profit-making PSUs. However, after discussions with its allies and with a view to giving a boost to the economic reforms process, the Union Cabinet decided to sell 10 per cent of its stake in the NLC as a part of its divestment drive.
This led to considerable opposition from the PSU’s employees. The DMK-supported trade union, Labour Progressive Front, the largest trade union at the NLC felt betrayed.
Also unhappy were other allies of the ruling Congress party, the Pattali Makkal Katchi (PMK) and the Left parties and their trade unions.
When asked where was the DMK when the Union Cabinet took its controversial decision, T K S Elangovan, organising secretary of the DMK, told rediff.com that two DMK ministers were out of the country at the time and another minister was attending an official function.
But the DMK had earlier supported the NLC divestment plan.In 2002, when the DMK was part of the BJP-led National Democratic Alliance at the Centre, the government had planned to divest its stake in the NLC but this was opposed by the employees who went on an 8-day strike. At that time, the DMK’s archrival, the AIADMK was the ruling party in Tamil Nadu.
Although the trade unions expressed their displeasure and threatened to agitate, the DMK, now ruling Tamil Nadu, did not make much noise.
So, the disgruntled workers decided to go on a strike. Thus 11,000 workers, 5,000 engineers, 3,000 non-executive staff, 12,000 contract workers, and traders and shopkeepers of the mining town began an indefinite strike from the July 4.
It affected the supply of power to Tamil Nadu, Kerala, Karnataka, Andhra Pradesh and Pondicherry. Many rural areas too were affected by power cuts following the strike.
On the morning of the day the strike started, Tamil Nadu Chief Minister M Karunanidhi wrote to the prime minister again asking him to shelve the proposal. However, there was no response from the prime minister.
It was then that M Karunanidhi issued a statement that if the central government could not resolve the issue, and since the decision taken by the government would be binding on the party, the DMK did not want to be a part of the government.
Elangovan stressed that at no point did the DMK threatened to withdraw support to the government as was reported in the media.
“The Cabinet decision was not in the interest of the labourers. That is why we just wanted to remain away from the government,” Elangovan said. However, he said that the DMK would “continue to support the UPA government, like the Left parties do, from the outside.”
M Karunanidhi wrote in his letter to the prime minister that “some disgruntled elements are trying to instigate violence. Any time that may turn out to be a grave law and order problem. The situation in the NLC is becoming serious day-by-day and the opposition is trying to exploit the situation. The continuation of the problem may result in the total break down in the supply of electricity, not only to Tamil Nadu but also to entire south India.”
After meeting key ministers Premier Singh decided to withhold the entire process of divestment.
So, what will happen to all the divestment plans?
“It is just kept on hold, not abandoned. We will insist that the government divest only the loss-making PSUs. We have no objection to that. We are not against divestment per se; we are only against the divestment of the profit-making PSUs,” Elangovan told rediff.com.
NLC, located in Neyveli - around 197 km south of Chennai - is the largest lignite mining and lignite-based power generating company in India.
The history of the NLC dates back to 1828 when ‘peat,’ a low calorific fuel of the coal family, was found near Point Calimere.
Today, it is one of the Navaratnas, a profit-making PSU, that earns the state Rs 1,000 crore (Rs 10 billion) every year, after expenses. It has mines and power stations and other facilities worth Rs 46,000 crore (Rs 460 billion). It employs 19,000 people and supplies southern Indian states 2,490 MW of power.
