Financial Daily from THE HINDU group of publications
Monday, Aug 19, 2002
Industry & Economy
Change in States' attitude augurs well for PSU divestment: Shourie
KOLKATA, Aug. 18
A MAJOR change can now be seen in the attitude of most of the State Governments with regard to privatisation of loss-making PSEs, and this augurs well for the PSU disinvestment programme taken up by the Government for 2002-03.
Making a presentation at an interactive session on `Privatisation: Building the consensus,' organised here by the Indian Chamber of Commerce (ICC), Mr Arun Shourie, Union Minister for Disinvestment and Development of North-Eastern region, said there seemed to be a sea change in the attitude of some of the States like Punjab or Madhya Pradesh, and once a consensus among the States is achieved on this PSU privatisation programme, "we are through."
He called for a sharp "focus" to unlock the enormous productive potential in these PSUs. While there was a kind of consensus, it never worked at the ground level because of the staggering of energy, he lamented.
Describing the success achieved so far as satisfactory, he said through a mix of strategic sales and equity dilution, some 31 PSUs had been successfully put on the block, and equity with a face value of Rs 835 crore has been sold for as much as Rs 11,350 crore.
He said the realisation, if put in a fixed deposit, would fetch for the country something like Rs 1,200 crore every year by way of interest in perpetuity. The market capitalisation of the divested PSU stocks had gone up by nearly Rs 75,000 crore, he pointed out.
While the Punjab Government, through its Directorate of Disinvestment, was now seriously looking at even the profit-making Punjab Tractors Ltd for stake dilution, Mr S.M. Krishna, Chief Minister of Karnataka, was committed to the privatisation of all State-owned units, said Mr Shourie.
States, he felt, should overcome their inhibitions, and come forward to privatise the PSEs. Suggesting that there now was a compulsion to privatisation, which was inescapable, Mr Shourie said even West Bengal had made a shortlist of units it wanted to put on the block, and this sure was a healthy sign.
According to Mr A.V. Lodha, President of ICC, good economics made good politics, and not the other way around. He said drastic steps were needed to enhance and build competitiveness. Pointing out that the time to clear the unfinished agenda or put in place second generation reforms was actually long gone, he said "it is now critically important to re-think policies and launch a national movement for growth like what China is doing, what Singapore did, and what many former East European countries are doing today."
On the process of disinvestment and privatisation now going on, he said "despite the hollow cry to protect the so-called family silver, the Department of Disinvestment today has recorded remarkable success stories - close to 31 transactions, perhaps the largest segment of reforms in the last decade." He said the total market capitalisation of 32 PSU stocks had jumped by 73 per cent between January-May 2002, against a rise of 14 per cent in capitalisation of the total BSE Sensex.
Between January and June 2002, there was a 349 per cent increase in the market cap of the stocks of some companies under strategic disinvestment. He said in fact the reverse had also happened; companies where news of delays in strategic sale or disinvestment came, stock prices actually got driven down, he pointed out. On the positive side, he said in companies like Balco and Modern Foods, wages actually increased with growth in sales and productivity, allaying the fears of large-scale labour lay-offs.
Send this article to Friends by E-Mail
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line