The Hindu Business Line : Treading the middle path on privatisation

FORMALLY announcing the burial of the Ministry of Disinvestment, the United Progressive Alliance (UPA) on Thursday took the middle path on the overall disinvestment policy, stating that it was "generally" against privatisation of profit-making public sector companies.

Proposing a case-by-case approach towards privatisation, the common minimum programme (CMP) of the UPA has said PSUs and public sector banks would be "encouraged to enter the capital market to raise resources and offer new investment avenues to retail investors."

The inclusion of the word "generally" for privatisation of profit-making units indicates that the alliance has been able to strike a fine balance between the concerns of the Left parties, which had sought a complete ruling out of privatisation of profit-making PSUs, and the need to keep the option open on a case-to-case basis.

The Left had objected to the fact that the draft CMP had merely mentioned a few Navaratna PSUs and had left out all other profit-making undertakings from the negative list on privatisation.

Elaborating on the UPA's stand, the Prime Minister, Dr Manmohan Singh, said the alliance could look into privatisation of profit-making PSUs if the profits were being made in monopoly conditions and not out of the inherent strength of the unit.

"If profits are made in circumstances such as a monopoly condition, then there might be a case for exploring the privatisation option," he said.

He said efforts would be made to bring about consensus among all alliance partners and the people at large on each and every case of privatisation. "The country must be taken into confidence on why privatisation is being considered a superior option over other alternatives," Dr Singh said while mentioning the controversy over the disinvestment of Centaur Hotel by the NDA Government, on which he pointed out the office of the Comptroller and Auditor General had passed negative remarks.

"The UPA is pledged to devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment. Generally, profit-making companies will not be privatised," the CMP has said. It has said that existing Navratna PSUs would be retained in the public sector while these companies raise resources from the capital market. For ailing units, the CMP has said that the option of inducting private industry to turn around companies that have potential for revival would be explored.

"The UPA believes that privatisation should increase competition and not decrease it. It would not support the emergence of any monopoly that only restricts competition. It also believes that there must be a direct link between privatisation and social needs," the CMP has said.

On the fate of the Disinvestment Ministry, Dr Singh said, "The Ministry will be abolished but it will be there with the Ministry of Finance as a separate department."

More Stories on : Politics | Disinvestment

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Change the mindset on rural poor

CMP balances reforms with other economic concerns — All subsidies to be targeted at the poor, needy

Cess on all Central taxes proposed

Concern over cess move

Treading the middle path on privatisation

UPA downplays IT sector

Trade unions to be consulted on labour issues

CMP gives priority to infrastructure

Another VDIS in the offing?