The cabinet committee on disinvestment is meeting today amidst high expectation of a spate of major decisions affecting large public sector units. In that context it is worth remembering what Arun Jaitley, Minister for Disinvestment, says of disinvestment. He likes to think of it, he says, as the art of the possible. That presumably means the government will try and push out the frontiers but a bit at a time and ensuring a favourable climate for it. So, do not expect a rash of dramatic changes.It makes sense to go about disinvestment steadily, case by case, getting the economics right and then trying to get the politics right. Anything like a battering-ram approach would be counter-productive. The area of what is possible has definitely been enlarged. This week the closure of six more loss-making units was announced and even though there have been the usual obligatory protests from the Trinamul Congress and others, the choice of units to shut down was sound and is likely to meet with general approval.Public understanding of the purpose of disinvestment has grown considerably although there may still be considerable confusion about the process itself and the shape of things to come. People no longer believe good money should be thrown after bad into failing enterprises or that governments should be making bicycles or running tanneries.Therefore, once provision is made for all the workers who will lose their jobs, the Mamata Banerjees are liable to find no one else is mourning the loss of the National Bicycle Corporation of India and the other five companies marked for closure.Closing down small, unviable and economically unimportant companies is the easy part. As for the rest of the non-strategic PSUs, Jaitley concedes there is no road-map and indeed there cannot be one. There can only be a few principles, a clear purpose and a case by case approach. Some guidelines are clear, others are not. It is right to ensure no monopolies result from disinvestment. Jaitley is correct to promise workers handsome VRS and ESOP packages. But it is not obvious, except to market fundamentalists, why the government should get out of profit-making enterprises.It is dishonest to forecast an expansion of jobs after privatisation when the data show job reductions usually follow at the enterprise level but employment rising if the economy as a whole grows. The strategic partner route is this government's major contribution to disinvestment theory and sets it apart from its predecessors who were sold variously on ideas like MOUs and management autonomy, and unloading equity in bundles on the stock market. Strategic partnering sounds like a fine idea; it is what every private sector major in the new economy appears to be doing currently. For the government the process of finding strategic partners should be impartial and transparent so as to eliminate all chance of cronyism. The government has evidently given plenty of thought to where domestic partners are desirable, what degree of government ownership should be retained, and where phased disinvestment should take place. It remains to be seen how shrewdly it has assessed the market opportunities for PSUs.
