Industry & Economy
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Disinvestment
Hoping on big-ticket divestments
Raghuvir Srinivasan
CALL it optimism, wishful thinking, touching faith in the system or plain courage, the Finance Minister, Mr Jaswant Singh, has budgeted for, believe it or not, Rs 13,200 crore as proceeds from disinvestment in 2003-04. This, when the actual proceeds from disinvestment in 2002-03 till date, is just Rs 3,360 crore against the budgeted amount of Rs 12,000 crore.
Mr Singh is probably emboldened by the big ticket disinvestments such as Hindustan Petroleum, Bharat Petroleum and the public offer of Maruti Udyog that are due in the coming fiscal and hopes that these will take him to the budgeted figure.
Unlike his predecessor Mr Yashwant Sinha in the last Budget, Mr Singh did not speak expansively about his Government's achievements on the disinvestments (or privatisation, if you please) front or on his plans for achieving the imposing target set this year.
Instead, Mr Singh just said that details about the Disinvestment Fund and the asset management company which will hold the residual government holding will be finalised early in 2003-04. Well, that by itself, is news. There has been talk in the past about the Fund and fond statements about how the proceeds of privatisation will be used for supporting displaced labour and so on. But the words never got translated into deeds, given the fiscal compulsions of the Government. It remains to be seen if Mr Singh is able to do what his predecessors could not.
The creation of an asset management company is probably becoming a necessity with the Government retaining residual holding in major privatised companies such as VSNL, Maruti Udyog, IPCL and IBP. It may be asking for too much but the government may have to constitute a professionally run asset management company to maximise its returns.
But for these two proposals, the Budget does not give away much of the Government's thinking on this vital subject. By setting itself a target, and an imposing one at that, the government is once again repeating the mistakes of the past. Apart from bringing pressure on itself to achieve such unrealistic targets, the government is also laying itself open to pressure groups which may want to scuttle the entire process.
The Government may also have to soon frame a comprehensive policy examining various contentious issues such as the creation of private monopolies or duopolies through the privatisation process. It may also have to clear up the dichotomy in its policy of a strategic sale for one oil company (HPCL) and a market divestment for another similar one (BPCL).
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