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Monday, Feb 17, 2003

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Divestment ironies

IS PUNJAB THE dark horse in public sector reforms? Quite possibly, if one looks at the roadmap and the pace it has set for achieving the goal. And is it causing blushes all around with its pursuit? Cut to the Centre. To most people, the subject of disinvestment conjures up images of Mr Arun Shourie and Mr Ram Naik, rolled up sleeves, refusing to recede from their positions. It means more politics than anything else; the economics of the programme ranks low and is little debated, as few ruling politicians are willing to let go of the reins of PSUs in a system of patronage and vote bank politics. No wonder the Vajpayee Government drew a blank in the last nine months, and latest reports indicate that no deed will be done in the rest of this fiscal. Of course, the disinvestment process has now been set in motion for HPCL and BPCL. But uncertainty still dogs the entire process, as the Government stands defied by individuals. There are few signs of the earlier rancour disappearing. Unions are angry and warn of strikes and blocking due diligence. External factors such as the Iraq crisis can trip the plans without notice. Above all, electoral compulsions will push everything aside.

It is an irony that the Centre's disinvestment policy should find an indirect supporter in the Congress-ruled Punjab. The State Government has put five PSUs — three of them high profile and listed — on fast-track strategic sale mode. Its Finance Minister justified the decision on grounds of heavy losses — Rs 185 crore annually — incurred by the State PSUs. There is hardly any return to the Government on the Rs 8,234 crore invested. Its financial burden will only increase when such loss-making undertakings default on loans and if State guarantees — which stand at Rs 19,000 crore — come to be invoked. Curious, but true, some PSUs showed profits but only on paper; the financial health of these enterprises is difficult to assess in the absence of audit. But what is clear, by the Government's own admission, is they are over-invested, over-staffed, low-yielding and in some cases not doing any activity at all. As things stand, the State is living beyond its means and can ill afford to waste its resources.

It is no less ironic that the Punjab Government has put the Congress, the principal Opposition party at the national level, in a piquant position of having to criticise the Centre for trying to sell "profit-making" and "strategic" PSUs and not do the same in a State ruled by it. As the party is opposed to the sale of profit-making units, it is bending over backwards to convince itself — more than others — that what it is doing is right. To clear its conscience, State officials explain that of the units lined up for sale, only Punjab Tractors is not in the red; that even its profits are declining; and that the government holding in the company is only 23.5 per cent. The party, which initiated the reforms in full vigour, is backing down now. It fools no one but itself when it says that the NDA Government's disinvestment policy is inconsistent. Happier it might feel if Punjab Tractors too were in the red. It can flaunt the consistency card.

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