Crawling towards market

The lack of consensus on disinvestment was very evident on Friday. Ministerial and trade union opposition turned what many hoped would be ...

The lack of consensus on disinvestment was very evident on Friday. Ministerial and trade union opposition turned what many hoped would be a watershed meeting of the cabinet committee on disinvestment CCD into a modest little exercise. The CCD could only bring itself to approve disinvestment in 11 medium and small public sector undertakings. Ram Naik, Ram Vilas Paswan and Manohar Joshi will have to be brought across into the ranks of the believers before any forward movement on MTNL, VSNL, the oil majors and Maruti can occur. But who will convert them? Arun Jaitley has the arguments, but not the political weight. It will take powerful persuasion from the Finance Minister and the Prime Minister to bring them around.

Reasoning with the naysaying ministers may or may not work but should be tried because argument helps clarify everyone8217;s thoughts, those of non-believers and believers alike. Ram Naik has won a crucial point, it would seem, with the rational-sounding argument that restructuring of oil majorsshould precede disinvestment. It will likely defer consideration of disinvestment in the oil PSUs well beyond the next CCD meeting scheduled for July. If it is Naik8217;s intention to buy time to examine more thoroughly questions of energy security and whether the oil majors are strategic assets, he is wise. The debate is not over yet and it is far too important to be conducted within the narrow confines of the department of disinvestment.

Paswan and Joshi, however, stand on flimsy ground and should be prevailed upon to give up their fruitless and damaging opposition to disinvestment in MTNL, VSNL and Maruti Udyog. Delay in deciding about Maruti is the most suicidal of all as the latest sales data show. Maruti has lost almost 20 per cent of its market share within a year. The steepness of this decline may be an exceptional phenomenon and with Euro-II emission norms met sales could start looking up again. But with Maruti8217;s market advantage from its former near-monopolistic position gone, the government should leave the business of selling cars to others and get out with the best price it can.

It does not make sense to bundle Maruti with other major PSUs in a so-called three-year plan. The government should read market signals and not put an artificial timetable on the Maruti sell-off.

Difficulties in forging a political consensus is one thing. What is not explicable is why sell-offs that are possible are proceeding at a snail8217;s pace. It has taken much too long already for the 11 PSUs discussed by the CCD on Friday to receive approval 8220;in principle8221;. Detailed schemes for the sell-off in each of them are still to be presented and approved. How long that will take is anyone8217;s guess. One third of the financial year has gone by and some of the 19 PSUs put on the block earlier are till in search of international advisers. Given this veritable PSU style of progress, it is difficult to accept the department of disinvestment8217;s assurance that the Rs 10,000-crore target can be met this year.

The objective of getting the best possible deal in the quickest possible time for each PSU is being lost in a welter of one-year plans and three-year plans and obtaining in-principle permission for this and that, not to mention recalcitrant ministers and trade unions. Disinvestment is sounding like a mirage.