Financial Daily from THE HINDU group of publications
Thursday, Jun 27, 2002
Industry & Economy
Logistics - Railways
Railway Minister not keen to divest PSUs on his turf
NEW DELHI, June 26
AFTER Mr Ram Naik, it's now the turn of the Railway Minister, Mr Nitish Kumar, to oppose disinvestment of public sector undertakings on his turf.
Mr Kumar told Business Line on Tuesday that he was not in favour of disinvestment in Rail India Technical & Economic Services Ltd (Rites) and Indian Railway Construction Corporation (IRCON).
"We have settled the issue of disinvestment in Rites and IRCON with the Disinvestment Ministry. There won't be any disinvestment in these entities," he said.
According to the Railway Minister, both Rites and IRCON were profit-making entities, characterised by the knowledge base of its employees.
The strength of these companies is the knowledge pool of officials who are posted on deputation from the Railway Ministry. "Once Rites and IRCON are disinvested and the deputation policy is scrapped, these companies will be nowhere," Mr Kumar said. Besides, he added, "What is there to disinvest in Rites and IRCON? They don't have any fixed assets and operate out of rented premises."
In its first report submitted to the Government this January, the re-constituted Disinvestment Commission, headed by Dr R.H. Patil, had suggested that a management/employee buy-out would be a viable option for disinvestment in Rites given the knowledge and expertise of its cadre of officers.
It had recommended sale of 51 per cent Government equity in Rites to the employees (both past and present) while 25 per cent should be retained by the Government. The balance equity may be distributed among reputed infrastructure consultancy organisations and infrastructure leasing and financing organisations after suitable pre-qualification.
In addition, the Railways should have an agreement with Rites under which continuous induction of talented railway personnel would be guaranteed for a period of five years, it said. However, it would be to Rites' advantage to develop its own cadre by absorbing experts from fields other than railways in view of the likelihood of increase in non-railway consultancy business, the commission had suggested.
The erstwhile Disinvestment Commission in its Third Report had recommended against disinvestment in Rites, stating that the balance of advantage was in favour of the company continuing as a PSU for sometime.
The PSU was again referred to the re-constituted Disinvestment Commission by the Ministry of Disinvestment, which observed that the time was opportune to consider disinvestment in the company in view of the stiff competition in international consultancy business.
"Rites should be an independent and competent organisation, which would be vibrant and internationally competitive. These objectives can best be met if Rites does not remain a PSU," the commission had noted.
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