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VIEWPOINT: POLITICALLY CORRECT
Reluctant Salesman
Disinvestment is in disarray because there is no
transparency or political will
By P. Chidambaram
He was the hunter.
He hunted with his pen. He wrote articles, editorials and books. His quarry
was, at different times, Indira Gandhi, A.R. Antulay, the Hindujas, the
Ambanis, Dr B.R. Ambedkar. It is a long list. Much of what he wrote has
been long forgotten, but his fearsome reputation is still intact.
Such is the man who is India's disinvestment
minister. Arun Shourie. Honest to a fault, totally convinced that he is
right and everyone else is wrong, Shourie has been minister for disinvestment
for 14 months. He has an able secretary, Pradeep Baijal. Yet, what do
they have to show by way of results? Zilch. In 2000-1, the Government
raised Rs 1,868 crore through disinvestment against a target of Rs 10,000
crore. This year, not
a rupee has been obtained against an ambitious target of Rs 12,000 crore.
 When
Arun Jaitley became disinvestment minister in December 1999, I advised
him to revive the Disinvestment Commission, which had been abolished a
few months earlier. My reasons were quite simple. First, the government
cannot be its own adviser. Second, it made sense for the political executive
to keep some distance between government and the actual disinvestment
process. Third, dealing with the Hindujas and the Dhoots is not easy even
in the best of circumstances. Finally, someone has to convince the deeply
suspicious electorate that disinvestment is not a distress sale of the
family silver, but a considered policy instrument to enhance enterprise
value and preserve employment.
To my great regret, Jaitley rejected the idea.
He thought he could do the job himself. He was lucky-he disinvested Modern
Foods and was moved out of the Disinvestment Ministry. Shourie has realised,
belatedly, the advantages of having a Disinvestment Commission. So we
have one today, albeit in a purely advisory role. In course of time, I
hope, Shourie will yield his powers to the commission.
Meanwhile, let us look at the progress in disinvestment:
Not one of the 27 PSUs cleared for disinvestment
this year has been privatised. None will be in 2001-2.
Air-India has one bidder which is "re-evaluating"
the situation. Singapore Airlines hopes to get a crucial condition regarding
the stake of foreigners raised from 20 per cent to 49 per cent.
Indian Airlines has no bidder left. At the rate
the bidders are withdrawing, VSNL will also have no bidders left. VSNL's
market cap has fallen by nearly Rs 25,000 crore in the past 18 months
and will fall further when its monopoly over long-distance services ends
in March 2002.
Since Shourie has little to show by way of results,
he is very frustrated and angry. He threatens to "reveal everything":
the propositions that the Hindujas put to him, the recording of conversations
between the Hindujas and the minister (Nixon style?), the importunities
of a Videocon official ("my senior in college") and how security
clearance was given to Jet Airways ("you find out").
Shourie promised transparency. It is difficult
to agree that every twist and turn was intended to impart greater transparency.
The different definitions of NRI/OCB, the post-bid security clearance,
the amendments to the draft shareholders' agreement and the other interventions
by the minister have resulted in the exact opposite: more opacity. Recently,
he was quizzed on these matters by Business World, and what does Shourie
do? He resorts to abuse, needlessly dragging in Sonia Gandhi's name and
countering, "I want to know what these fools mean by transparency."
He should put the question to T.R. Prasad, the
cabinet secretary, who is certainly no fool. I cannot vouch for the authenticity
of the letter dated July 17, 2001 which Prasad purportedly wrote to Brajesh
Mishra. But the logic of the argument is unassailable. The author of the
letter advised that the Government should maximise the value of the enterprise,
attract more bidders and sell in a transparent manner. The advice was
given in the context of Air-India, but it will apply to every case of
privatisation.
Shourie forgets that the Government is the seller.
How does it matter to the Government who the buyer is, so long as he pays
good value? No other country regards owning an international airline as
a matter concerning national security. The truth is that the Government
does not want to make a clean exit. It wants to retain a crucial stake,
appoint its own directors and run the business through a proxy. In short,
the Government does not want a risk-taking entrepreneur, it wants a sucker.
Privatisation is in such disarray because everyone
has seen through the Government's game. The hunter has become the hunted.
It's a pity. Shourie is too talented to be wasted. The prime minister
should disband the Disinvestment Ministry, hand over full authority to
the Disinvestment Commission and find another job for Shourie.
(The author is a former Indian finance minister.)
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