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Disinvestment of PSUs yet to take off
By P.N.V. Nair
There has been a lot of talk with very little being achieved on the crucial issue of PSU reforms, more specifically the disinvestment. In spite of creating a ministry at the Central level and identifying about 47 PSUs for disinvestment, the process is yet to take off. This is because disinvestment is a word not understood by many, allowing everyone to do everything, or nothing, depending on the political and social compulsions. It is this sort of charade that has resulted in unnecessary debates regarding controlling interests, level of disinvestment, strategic partners etc. If disinvestment was replaced by privatisation, we would have been up and away by now. This is the general feeling among economists.
The public sector undertakings that were once seen as jewels in the crown are now no more than white elephants. The PSUs though enriched with assets and property have neither a proper management thrust nor the autonomy to react out to the market, which is the lifeline of any business. This has resulted in several undertakings sinking into the red. And it is the financial bankruptcy of such units, and not the perception that the government would do better off governing rather than doing business, that set the ball of disinvestment rolling. However, few goals have been scored yet as the government is yet to master the art of disinvestment.
Disinvestment was largely untested waters but the Balco deal has thrown up a lot of contentious issues that may crop up with any other deal, be it Maruti, SCI, VSNL or Air-India. There are several serious underlying issues that Balco brings to light such as objections from state governments, the practical difficulties of infrastructure, employees' concern and the role of labour unions. The Union budget pegs disinvestment target for the current fiscal at a whopping Rs 12,000 crore. But the dragging phase of disinvestment and the bitter lesson of Balco make the target seem next to impossible.
A major stumbling block in the transfer of PSUs is the method of valuation. Almost all the units have substantial assets in the form of real estate, mostly prime locations, equipment etc., which must have been acquired at throwaway prices over the years. When a private company or an individual is buying out the majority stake there is bound to be a furore as to the transfer of property. It is like selling the family silver. Instead of knocking the doors of courts every time a deal comes up the issue could be settled once and for all by clearly defining the line of action to ensure a smooth transfer.
The Department of Disinvestment (DoD) is, meanwhile, setting up a website in a bid to promote transparency in the disinvestment process. The proposed website would facilitate greater interaction between the Department and the general public by providing a forum for exchange of information. In its annual report tabled in Parliament recently, the Department listed 46 PSUs in different stages of disinvestment proceedings.
(16/6/01)
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