Changing gears

It is unfortunate that even when there is a broad consensus in the National Democratic Alliance on certain issues like divestment, ministers express contradictory opinions. The reference here is to the proposal to divest the government8217;s under-50 per cent stake in Maruti Udyog Limited. When Minister for Heavy Industries Manohar Joshi disputes Minister of State for Disinvestment Arun Shourie8217;s claim that a Cabinet committee has cleared the proposal to sell off the government8217;s stake in the premier car manufacturing company, it does not show the Vajpayee government in a good light. Joshi8217;s contention is that all that the Cabinet committee has decided is to entrust the task of consulting Suzuki in the matter to a committee of secretaries. Not only that, the committee is also free to discuss with Suzuki the possibility of the government buying a portion, if not all, of Suzuki8217;s share in the company. In other words, the government is not even averse to the idea of a complete takeover of the company! How could theperceptions of two ministers be so different when they are bound by a common manifesto? Though the NDA periodically pays lip service to divestment, there are powerful ministers who do not want to part with the public sector organisations under their wing.

This syndrome was at work when Civil Aviation minister Sharad Yadav did not take kindly to the proposal to liberalise the aviation sector and privatise the national carriers. What these worthies do not realise is the heavy price the government will have to pay for the dithering on divestment. In the case of Maruti, for instance, the delay has raised questions on the quantum of money divestment can generate in the changed circumstances. When talk of divestment first began, Maruti accounted for 80 per cent of the cars sold in India and it was one of the great success stories of industrial India. Today, the company is plagued by labour unrest and has a much lower market share 8212; about 60 per cent. Not surprisingly then, the value of the Maruti stock has fallen drastically as a result. At this rate, the government8217;s target of raising Rs 10,000 crore this year through divestment will remain a pipedream. What is true about Maruti is true about a host of other companies. The hesitation the government showed in fullydenationalising the banks is a case in point.

All this is bound to have a deleterious effect on divestment. One reason why India has not been able to attract as much foreign direct investment as some South Asian countries have been able to is because foreign investors are not enthused by such dithering, not to mention corruption at various levels of decision-making. If the government is really serious about withdrawing from as many economic sectors as possible, it should first set its own house in order. Once a decision is taken after weighing all the pros and cons, the concerned ministers should not be seen speaking at cross purposes. More so when such bickering is likely to cost the exchequer losses of hundreds of crores of rupees.