Slow-Mo Disinvestment

And all this has happened (perhaps only coincidentally at the same time as P Chidambaram's visit to the Fund-Bank meeting) a full six months after the current financial year began, three months after the United Front government came to power, and two months after it presented its first Budget. No one, it seems, is in a hurry to raise the Rs 5,000 crore needed to achieve the fiscal deficit target of 5 per cent of GDP by March-end. Meanwhile, a spat is brewing between the industry ministry and the disinvestment commission over petty issues. If this grows into a full-blown row "" and given the personalities of the people involved, it might "" it could delay things even further as different agencies of the government fight for jurisdiction and control.

Not to be outdone and never eager to learn from history, the two communist parties are trembling with rage at the government's audacity (which, mind, is obvious only to the communists and no one else) in going ahead with the disinvestment programme in VSNL and SAIL. They are threatening to huff and puff and blow the house down. All things considered, therefore, observers of the scene can be forgiven for thinking that it suits everyone except perhaps the finance minister, to delay the disinvestment. It is almost as if the government, again with the exception of the finance minister, is hoping against hope that the matter can be postponed long enough so that it doesn't attract the expected odium.

A superficially plausible argument in favour of the delay is being made that with the stock market down in the dumps, this is not the right time to hawk shares. The implicit suggestion is that if the disinvestment is carried out when it has revived (which may not be for six months) the government may get a better price for its shares. But this is by no means certain. Even if the stock market zooms, where is the guarantee that investors will want to pay high prices for all PSU shares? For some good ones they might; but for a majority of the public sector companies, they will give the thumbs-down sign because why would anyone want to put his money in a company which is controlled and managed by the government and which is neither a monopoly nor belongs to an oligopolistic market structure where easy rentier profits can be had?