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Disinvestment of CPSEs: Fiscal compulsion Vs national interest

By IndianMandarins- 06 Nov 2019


There has been a decade of evolved wisdom that ‘disinvestment’ as a tool augments economy of any country by infusing fresh blood in terms of investment, technology transfers, advance management practices and competition. It equips business entities to compete and sustain in the global market. Those in the know of affairs say that the very perspective nurtures the economic interest with high sustainability quotient else it resorts to ad-hocism and goes against the national and economic interest. 

Gaining and retaining investors’ sentiment and confidence became key word ever since the New Economic Policy came into existence in 1991 with three new buzz words -- privatisation, liberalisation and globalisation.

This ‘sentiment’ still dominates our economic policy formulation often putting future perspective to the rest. There are enough examples indicating that disinvestments are increasingly becoming tool to bridge fiscal deficit. Media reports often underline that disinvestments give undue advantages to crony capitalists.

For example the cabinet note on disinvestment of CONCOR overlooked the market value of its land which is worth Rs 20,000 cr. ONGC was made to purchase HPCL not as part of a master plan to create integrated oil major in India, but just to extract the surplus funds available with ONGC. Now the impact of this sale is being felt. ONGC has been asked to sell shares of HPCL. BPCL is also to be sold. With the sale of BPCL and permission to ONGC to sell shares of HPCL, the foothold of the private sector in the petroleum sector would be well established.

With the sale of Air India, the entire commercial airlines or civil aviation sector would entirely go into the realm of the private players. Reducing the government’s share in NTPC and BHEL to about 26% which is a matter of time before the power sector also moves over entirely to the private sector. Had the sale of MTNL and BSNL not been put on hold the entire telecom sector would have shifted to the private sector. Between the telecom and power sectors, private sector companies have almost Rs 10 lakh crore of outstanding with banks. Even in sectors where geo-politics and national security is the key concern, there is ad-hocism and absence of a long-term perspective.

Economic and political sanctions that have become the staple diet of foreign policy of developed countries and import content in the defence sector is close to 85%. There is a need for a long-term vision and very systematic and concerted planning by the public sector enterprise. 

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