As a section of pubic sector bank employees go on a two-day strike to protest against the privatization of state-run lenders, they have got a formidable ally in ex-RBI governor Raghuram Rajan.
Rajan, in an interview to PTI, cast doubt on the successful privatization of inefficient public sector banks and added that if they are sold to corporate, that will be a huge mistake. In November 2020, Rajan along with former RBI deputy governor Viral Acharya had written a scathing article opposing the suggestion of the central bank’s working group to give banking licenses to corporate.
Doubts on the Target set by the Government in Budget.
Rajan said that while the 2021-22 Budget has placed a lot of weight on privatization, The history of the government delivering on this is chechered, and he wondered how it will be different this time. The government has budgeted Rs 1.75 lakh crore from stake sales in public sector companies and financial institutions, Including Two public sector banks and one genetal insurance copany for the next fiscal beginning April 1.
However, in the past, the government has failed to meet its divestment targets be huge margins. The government succeeded in privatizing IDBI Bank in 2019 but it was bought by the Life Insurance Corporation of India (LIC), which is owned by the government itself, effectively retaining the ownership of the bank. Apart from that, the government has managed to merge 14 public sector banks in the last four years.
Written by Priyanshu kashyap