The government of India has been the greatest value destroyer
for the investors in Indian Equities. The Nifty PSE index, comprising most
listed PSU stocks, now trades at the same level as it was in 2006, implying no
return for 13yrs, if we consider point to point investment period.
The CPSE ETF comprising top 22 Central government undertaking
stocks, launched in 2014 is giving negative return to its investors.
Many large Public Sector companies are now trading at multi year
low prices, adjusted for all dividends and other corporate actions.
The government of India therefore has legal and moral duty to explain
to the investors, why it should continue to manage these businesses. They have
obviously not managed these great businesses like MTNL BEL, Coal India, etc
well and destroyed huge wealth for the nation as a whole and individual
investors as well.
The Supreme Court may like to examine, whether the government
should be permitted in the first place to raise equity from investors through
sale of minority stakes, given that the Constitution of India requires the
government to be "Socialist" and not indulge in profit making at the
people's expense. Or at least it must consider extending the provisions of the
Companies Act relating to oppression of minority shareholders and mismanagement
to the listed government companies.
The market regulator must consider bringing the concerned
ministers and bureaucrats from the respective operating ministries and
departments within the regulatory framework for disclosures and investors
protection.
In an unrelated but important matter, the finance minister
publically admitted that the RBI and the government were aware of the
mismanagement and impropriety issues at Yes Bank since at least 2017.
Considering that Yes Bank is a constituent of Nifty and Bank Nifty indices. The
National Pension Scheme (NPS) is permitted to make equity investment only in
ETFs based on benchmark indices. This means the government deliberately let the
money of the subscribers to NPS (mostly government employees and small poor
investors) to be invested in Yes Bank at a price of over 300, despite knowing
that it is a bad bank. This is a blatant breach of trust, which needs to be
investigated and punished.
If the government wants to build clean, accountable and strong
corporate and financial systems, it will have to begin the work from itself and
show the path to others. The other way round has never worked; it never will.
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