Go ahead now. Divest

The setting up of the National Investment Fund by the Cabinet is welcome. Proceeds from all disinvestment after April 1, 2005, would go into...

The setting up of the National Investment Fund by the Cabinet is welcome. Proceeds from all disinvestment after April 1, 2005, would go into the corpus which would be managed by public sector fund managers. Returns on these funds would be used in the social sector for education, health and employment generation and as capital outlays for the revival of ailing PSUs. The government should now be able to proceed with disinvestment of public sector enterprises. The country stands to gain in three ways. First, the efficiency of production increases as ownership becomes more diversified. Second, social sector spending will increase. And, third, the disinvestment will set the stage for privatisation through the public sales method. In the future when there is political coalition that supports privatisation, selling say 2 per cent shares to move from 49 per cent private to 51 per cent private ownership will be easier. This method would be the preferred method rather than strategic sales which has led to an increase in concentration of assets with the few companies already operating in the sector.

The Left has until now objected to all efforts by the UPA government to sell off any part of public sector enterprises. This was regardless of whether the enterprise was involved in an activity that had no national importance, such as in running hotels, whether it was perpetually loss making or whether only a part of the government8217;s take was to be sold. Though the Common Minimum Programme agreed only on not selling profitable public sector enterprises 8212; the Navratnas 8212; the Left screamed in objection every time there was a proposal for disinvestment. The latest objection was that proceeds of disinvestment should not be used to finance current expenditure. The NIF addresses this objection. The proceeds of disinvestment will not be spent. They will be put in a corpus. The returns on the corpus will be used for the social sector objectives that the Left has been so strongly advocating.

The NIF sets the stage for disinvestment in Budget 2005. Other than selling loss-making public sector enterprises, the government should reduce its share in profitable public sector enterprises to 51 per cent. This keeps the control and ownership of these enterprises in the hands of the government, as the CMP requires. Since no strategic sales are being made, national assets are not being sold off to a few private companies. The sale would be consistent with the Left notion of public ownership of the means of production. In the Soviet system as well, public ownership took two forms: there were collective farms and state-owned farms. State ownership is not the only kind of public ownership. A diversified public ownership through the sale of shares to the public, including to the workers of the enterprise should not make the Left see red.