The latest phrase that policy watchers are now often encountering in post-Cabinet press releases is ‘alternative mechanism’. Such a framework has been used to oversee mergers of state-owned banks, planned privatisation in state-owned companies, minority stake sales, and the Centre’s new exchange traded fund.
The idea, government officials have always reiterated, is to take away some of the workload from the Union Cabinet, and cabinet committee of economic affairs, both led by Prime Minister Narendra Modi.
So what is an ‘alternative mechanism’ (AM).
Essentially, it is a group of ministers
empowered with taking certain decisions on the behalf of the Cabinet. The Modi
government has not formed many multiple Group of Ministers
(GoMs) and Empowered Group of Ministers
(EGoMs), like the previous Manmohan Singh
government did. But some have been formed sparingly and for more specific topics as compared with the previous government.
As things stand, there are two kinds of AMs. The ones more empowered are used for deciding upon minority stake sales of PSUs through offer-for-sale or initial public offerings, and through the CPSE ETF. In these, once the cabinet gives an in-principle approval, the AM
decides on a case-by-case basis and the Department of Investment and Public Asset Management (DIPAM) does not have to go back to Cabinet to get approval for each PSU.
The other kind is being used for strategic sales and mergers of PSBs. In case of the latter, once the banks have decided to merge among themselves and worked out various issues like share valuations, share swap ratio and discussions with minority stake holders, the exchanges will be notified. Simultaneously, the alternative mechanism
and the Reserve Bank of India will study the proposal and ‘give their blessings’ to the banks to go ahead with the merger. The final approval will still be given by the Cabinet.
For privatisation of state-owned companies, or what the government calls strategic disinvestment, the final decision on the privatisation and approving the buyer rests with the CCDA. However, the AM
will decide from the stage of inviting of expression of interests (Eols) till inviting of financial bids. For these issues, the Cabinet or CCEA do not have to be approached.
The only GoM
that the Centre has explicitly called for is the one for the privatisation of Air India. The idea behind all these mechanisms is simple: Ensure that due diligence is followed for each and every step to ensure that probing agencies and courts do not haul up ministers and officials later.
Finance Minister Arun Jaitley
heads the Air India GoM
and all these AMs, expect the one for bank mergers. The composition for that AM
has not been decided yet, though officials say that Jaitley will head that as well. Jaitley’s pre-eminence has led to an inner joke among journalists who cover various policy beats: That he is the Modi
government’s Pranab Mukherjee. It should be recalled that Mukherjee, before he became President, headed almost all of the Manmohan Singh
government’s GoMs and EGoMs.