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COVER STORY: GOVERNMENT
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Arun
Shourie
Disinvestment
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Prisoner
Of
The System |
Ministers:
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1
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Joint secretaries and above:
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4
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No. of PSUs referred:
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31
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Budget in Rs cr (2001-2):
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4.04
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Arun Shourie is
a minister with a clear mandate but unclear powers. That's why despite
his zeal for crusade, his sincerity of purpose and his well-honed skill
of gentle persuasion, the minister of disinvestment is heading nowhere.
And for no apparent reason. On the face of things, he has both the approval
and method to go ahead with a big bang. Even before he came to the ministry,
a disinvestment commission had worked out details of privatising 58 PSUs.
In 2000, the Vajpayee administration declared its policy to privatise
all "non-strategic" PSUs.
In spite of such a well-laid ground for disinvestment,
Shourie's 13 months in the ministry have been rather dismal. In 2000-1,
disinvestment was less than 20 per cent of the year's target-Rs 1,868
crore against the target of Rs 10,000 crore. The Bharat Aluminium Corporation
Ltd (BALCO) was the only major company to be privatised but even that
created enough uproar to paralyse the NDA Government in March this year.
That's Shourie's first and probably the biggest
hurdle: political doublespeak on privatisation. The aftermath of BALCO
is still taking its toll. A third of the financial year 2001-2 has passed
with zero disinvestment. Officials at the Heavy Industries Ministry confirm
that the BALCO controversy has affected Maruti disinvestment. Same could
be true of Videsh Sanchar Nigam Limited (VSNL) and Air-India (A-I).
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| Promptness of response |
7.0 |
| Understanding of issues |
8.0 |
| Commitment to reforms |
9.0 |
| Openness to ideas |
8.0 |
| Achievements |
2.0 |
| Average score |
6.8 |
| OVERALL RANK |
3
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| All ratings are on a scale
of 10 |
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"When
each minister starts determining what companies should be sold and
who they will sold to there will be problems."
Arun Shourie
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Though the Government has already agreed in principle
to disinvest all non-strategic PSUs, there is still strong opposition.
For instance, all 48 PSUs under the Heavy Industries Ministry are non-strategic
and should, ideally, be privatised. But Heavy Industries Minister Manohar
Joshi is against disinvestment of five PSUs (see The Last Emperor). There
are other ministers, not as vocal as Joshi, but equally opposed to privatisation
of PSUs under their control. The Civil Aviation Ministry is delaying the
privatisation of five hotels of the Hotel Corporation of India that come
under of A-I's administrative control. Spanners are also being thrown
into privatisation of A-I and Indian Airlines (IA). A-I has only one bidder
left, while IA has none. "The two airlines are being systematically
killed to benefit one private airline," alleges Shourie. More than
a revelation, it is a sign of helplessness.
Disinvestment of Hindustan Organic Chemicals
(HOC) was delayed because another PSU was allegedly interested in buying
it. It turned out to be just a ploy by an MP from Maharashtra to scuttle
the entire process. The predator PSU later clarified that it was never
remotely interested in hoc. "When each minister starts determining
what companies to be sold and who it will be sold to, there will be problems,"
says Shourie.
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COST
OF NON-PERFORMANCE
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Not one of the 27 PSUs cleared for disinvestment
this year has been privatised
Market value of PSUs eroding: VSNL's value
has plunged by Rs 24,290 cr in the past 18 months
COMMITMENTS
The minister refuses to make many promises,
but disinvestment in VSNL, Air-India, ITDC, IPCL, IBP Ltd, CMC Ltd
is in the pipeline.
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Despondent and anguished, Shourie has stopped
mincing words. "In the present consensus-driven government there
are obvious things that cannot be done," he says. He refuses to make
any future promises, but has a suggestion that can turn the fortunes of
his ministry. "Once the government decides to disinvest, it should
hand over the company to another ministry, may be the finance ministry,
so that the sell-off can proceed unhindered," says Shourie. The proposal
may sound radical, but if the 10th Five Year Plan (2002-7) disinvestment
target of Rs 75,000 crore is to be taken seriously, nothing less than
bold measures will work.
Shourie also needs better PSUs to be referred
to his ministry, in addition to the 31 currently on his plate. If a PSU's
net worth is taken as a rough parameter for the expected yield from disinvestment,
of the 31, 15-whose net worth count-will yield no more than Rs 6,975 crore,
far short of the Rs 12,000 crore target set for 2001-2. "We do not
have sufficient projects to reach the disinvestment target," says
Disinvestment Secretary Pradip Baijal.
Of the top 10 profit-making PSUs on March 31,
2000, five are in the oil sector, two in telecom and one in power. Among
the oil sector PSUs, the sale of only IBP has been cleared. In telecom,
profitable PSUs like MTNL and BSNL (networth Rs 63,000 crore) have not
yet been put on the block. "To realise good value, timing of the
sale is vital. Companies like BSNL and MTNL can fetch a good price today
when they have strategic advantages," says Baijal. Amid procrastination,
politics and turf wars many key PSUs targeted for sale are losing their
market value. VSNL's value has plunged from Rs 30,875 crore in February
2000 to just Rs 5,585 crore in mid-August 2001-just one instance of what
the non-performance on disinvestment is costing India.
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