Now, the Patil formula for disinvestment

With several of the government’s big guns batting against disinvestment anyway, other ministers are feeling emboldened to join the batt...

With several of the government’s big guns batting against disinvestment anyway, other ministers are feeling emboldened to join the battle as well. This time, it’s Minister for Heavy Industry Balasaheb Vikhe Patil’s turn. In a letter to the PM, Patil’s suggested what he thinks is a more transparent, more rational and acceptable approach.

Patil’s letter says that the majority of PSUs are just as profitable as their private sector counterparts and ‘form effective bulwark against depredations of private multinationals.’ He then goes on to say that while the purpose of disinvestment was to fund social sector initiatives, selling off of PSUs is causing unemployment — this is much the same argument made by George Fernandes earlier.

He then goes on to support the Fernandes-Ram Naik stance by saying, ‘in companies that have attained a certain degree of profitability and professionalism only dilution of government equity would be undertaken.’ Stripped of the jargon, that means no strategic sale of HPCL/BPCL. He then goes on to buy time for companies that are loss-making. Divestment, he says, is to be done ‘after a proper assessment is done of the company’s worth after prospective restructuring is complete.’ Since you can put any value to a company after a restructuring is complete, and this will be dramatically different from the value a potential bidder will put to a sick-firm, this effectively means there will be no sale of sick units.

And having made his basic points, Patil then gives some non-controversial and sensible suggestions. He says that if companies are beyond revival, they should be closed down quickly and, ‘if necessary, appropriate legislation may be enacted to put such companies beyond the purview of legal obstacles like SICA etc.’

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