A midway diversion to nowhere - II: Disinvestment
In spite of full recognition of the pertinence of limiting
government’s role in business to core and strategic areas and exiting all
non-strategic businesses successive governments have failed in achieving the
stated objectives and targets. The February 2002 President address to joint
session of the Parliament categorically admitted that “Learning from our
experience, especially over the last decade, it is evident that disinvestment
in public sector enterprises is no longer a matter of choice, but an
imperative. The prolonged fiscal hemorrhage from the majority of these
enterprises cannot be sustained any longer.”
The primary reasons for the abject failure, in our view, are
(a) lack of a comprehensive policy framework on the issue of government role in
business and (b) lack of commitment to the stated objectives of disinvestment.
Evidently, the disinvestment program has been mostly used as a measure to
manage fiscal balance rather than as a business or policy decision.
Consequently, in good times when fiscal and market
conditions were favorable miniscule disinvestment took place; whereas in
adverse market and fiscal conditions maximum disinvestment took place. Also the
actual disinvestment in most cases did not follow any conceptual pattern. It
was mostly on “what could be sold today” basis. The price realization was also
substantially below par in most cases. Recently concluded NALCO, SAIL are
classic example of distress sales. BSNL is probably epitome of government’s
policy blunders.
For records, the Chandershekhar government in 1991 originated the idea of
disinvestment in public sector enterprises (PSE) with the stated objective to
“broad based the equity, improve management and enhance the availability of
resources for these enterprises”. In April 1993 the Rangrajan Committee that
was set up to make recommendation on the issue of disinvestment, made some
radical suggestions which obviously remained unimplemented. The NDA government
added the term privatization to disinvestment policy in 1999.
(Source:
Department of Disinvestment) PSE Disinvestment
so far
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