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Monday, Sep 09, 2002

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Disinvestment derailed

DISINVESTMENT, THE BUZZWORD of recent times and perceived by many as the flavour of the reforms process, certainly deserved a better deal than what it got from the Vajpayee Government on Saturday. The chain of events leading up to the week-end meeting of the Cabinet Committee on Disinvestment made sure that it was just a formality — a clear pointer to this crucial reform measure turning wobbly and scattered. That the CCD at last managed to meet tells its own tale: Its four earlier scheduled meetings did not take place as opposition to the strategic sale of HPCL and BPCL snowballed within the BJP and among coalition partners. It reflected badly on the Government and worse on the Prime Minister, who played mediator but failed to douse the fire started by the Petroleum Minister, Mr Ram Naik, and fanned by the Defence Minister, Mr George Fernandes, for his own reasons. What is more, other Ministers — Mr S. S. Dhindsa, Mr Balasaheb Vikhe Patil, Ms Uma Bharati, et al — piggy-backed on this development and succeeded in doing their own bidding.

It is sad they got together to derail the process by openly denouncing it. If they feared negative fallouts from disinvestments, in general, and strategic sale, in particular, they should have addressed the issue in a manner that would help, and not harm, the cause of reforms. A mid-course correction, if necessary, should be done by all means. But the argument of private monopoly is bunkum. Doesn't the government cast its large shadow on the private sector, even after privatisation? The VSNL case answers the question. Is it not true that more the government professes to liberalise the economy the more it intervenes, with its bailouts, recaps and rescue packages? Without doubt much is at stake for the entrenched interests in the various PSUs and their administrative Ministries. Let it be said, with due respect to the serious and honest supporters of the public sector, that it is the system of patronage and favouritism that is difficult to shed. Naturally knives are out now, the opportune moment.

No less than the Finance Minister himself said in his Budget speech for 2002-03 that the "change in approach from the disinvestments of small lots of shares to strategic sales of blocks of shares to strategic investors has improved the price earning ratios obtained". Market is no respecter of political bargaining. The BSE Index of PSU shares has gained 80 per cent since January compared to a five per cent drop in Sensex. It rode on the disinvestment drive. Certainly not on public offering hopes. The CCD decision to spare the oil majors is a victory for Mr Naik, no doubt. But how much the PSU stocks, particularly HPCL and BPCL, lost their value since Mr Fernandes launched his blast last month is too well known. How the target of Rs 12,000 crore will be met remains to be seen. The only gain for disinvestment and its Minister, Mr Arun Shourie, is a decision on barring PSU bids. But where is the guarantee that this Government will not backtrack from it yet again?

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