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Divestment panel gets new life

THE APPOINTMENT LAST week of a new chairman of the Disinvestment Commission after a lapse of over 20 months is but a feeble attempt to stop the drift in the policy of divestment that the Centre has been pursuing in the last seven-eight years.

The Budget for 2001-02 takes credit for a receipt of Rs 12,000 crore from divestment and apportions Rs 7,000 crore for restructuring assistance to PSUs, safety net to workers and debt reduction. The balance Rs 5,000 crore is proposed to be utilised as ad ditional budgetary support for social and infrastructure sectors on Plan account. All pious intentions; but there is no firm indication of a breakthrough in the divestment exercise this fiscal, although four months are over. It seems it will once again b e a case of missed divestment proceeds target with attendant adverse impact on resource availability for identified purposes, if the Union Government is unable to formulate a divestment policy over which there is a broad measure of political consensus an d acceptance by organised trade unions.

The first chairman of the Disinvestment Commission, Mr G. V. Ramakrishna, a veteran bureaucrat, demitted office on November 30, 1999, saying that the Government should give due importance to the divestment exercise, which should be seen as part of the re form process. Two other members of the commission had resigned soon after the NDA coalition ministry had assumed office. Clearly, the body had a tenuous existence and had the unpleasant experience of seeing the authorities sit over the reports it had pre pared. Such a fate should not befall the new commission headed by Mr R. H. Patil, who acknowledgedly did a good job at the National Stock Exchange. A fresh effort towards a well-directed policy should ideally start with the Prime Minister, who heads the Cabinet Committee on Divestment, holding a meeting of state chief ministers, labour ministers, his ministerial colleagues and central trade unions. It is not only the states and trade unions which harbour strong reservations about the way this sensitive issue is being handled by New Delhi; the administrative ministries at the Centre too are divided. After the basis for an implementable policy has been laid down, the Ministry of Disinvestment should take the states and trade unions into confidence while initiating divestment in individual PSUs. The drama over Balco could have been avoided if this consultative process had been followed. The Centre wants the resurrected commission to play an advisory role; but take into account the interest of workers, em ployees and other stakeholders in PSUs while framing its recommendations.

Given the standing of today's political masters, it would make much sense to involve not only the commission but also a respected and independent institution like the Comptroller and Auditor General of India right from the stage of appointing global advi sors and inviting bids. This, it is hoped, will greatly minimise the chances of the political masters entering into what may be called sweet-heart deals for selecting strategic partners. Also called for is a stipulation that tainted corporates cannot bid . It may, of course, necessitate defining parameters by which a company will be treated as tainted. In any case, a tenderer reserves the right to reject a bid without assigning any reason. Finally, the Union Government should give up the strategic partne r route in favour of the open offer route, when the stock market revives and prospects for realising better value for shares being sold are assured. The transparency in open offers should go a long way in freeing the authorities from the charge of being hand-in-glove with the successful bidders. Meanwhile, the Centre should immediately decide on the disposal of the reports submitted by the previous commission.