New resolve for a thankless exercise

THE PUBLIC SECTOR disinvestment programme received a shot in the arm with the Government announcing on Friday the strategic sales of two undertakings, the Computer Maintenance Corporation (CMC) and the Hindusthan Teleprinters Ltd. (HTL). The respective buyers, Tata Consultancy Services (TCS) and HFCL, will assume management control immediately while the Government keeps a residual stake in both. With these, the number of units disinvested through the strategic sale route goes up to four. The first government undertaking to be so sold was the relatively inconsequential Modern Foods and the second was Balco.

The Government will get Rs. 152 crores for its 51 per cent stake in CMC and another Rs. 55 crores for its 74 per cent stake in HTL. These would be the first earnings under disinvestment for the year and, although constituting less than 2 per cent of the Rs. 12,000 budgetary target, are still significant in that they signal the new policy resolve to push ahead with the public sector sale. Recently the Government advocated a fast track approach for 13 undertakings, basically involving the drawing up of an accelerated timetable for their stake dilution and holding a core group of secretaries responsible. Earlier, the BJP-led coalition had underlined the importance of the sale process by entrusting it to a separate Ministry and more recently elevating the Minister in charge, Mr. Arun Shourie, to Cabinet rank. The dormant Disinvestment Commission has also been revived. All those are welcome moves. An articulation of the need to move speedily is what the new approach signals. Considering however the meagre track record and also the unexpected change in the global economic scenario following September 11, there is little scope for optimism, notwithstanding the two recent sales.

There is perhaps a need to look at the lacklustre record of disinvestment with a degree of equanimity. Goal-setting such as what is implied by the new time-bound approach or the existing budgetary goals for the sale does send out messages of urgency, even while appearing unachievable. Pertinently the number of undertakings chosen for speedy divestment is less than half of what was identified at the start of the year, but even the new list is daunting. As for meeting budgetary numbers, this year too might see huge shortfalls, unless some big-ticket deals - of the type involved in say Maruti or one of the two airlines - materialise. But for a variety of reasons - in addition to the commonly recognised ones some new ones have cropped up - government stakes in the big and the more high-profile public sector undertakings cannot be sold that easily. Or even more relevantly without acrimony. Apart from creating an unprecedented ruckus, the Balco sale of just seven months ago failed to set a healthy precedent.

The vastly changed international environment brings with it a new set of challenges. The strategic sales of the two airlines - Air India and Indian Airlines - were not exactly proceeding smoothly even before the terrorist attacks. The former is left with just one eligible suitor, the house of Tatas, whose enthusiasm has been dampened by the exit of its consortium partner, Singapore Airlines. There have been no serious candidates for Indian Airlines. After September 11 the global aviation industry has nosedived, with some previously outstanding airline companies descending into near bankruptcy. The Government will obviously reckon with these developments and do all that it can to reduce delays which have wreaked havoc on the valuations. Evolving a political consensus ought to be high up on the agenda. Welcome as the two recent divestment are, they are only the start of a more resolute phase of government action.

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