M Saraswathy and Samie Modak's front-page lead report, "Suuti stake: LIC faces investment cap hurdle" (July 14) has once again raised my curiosity about the benefits of so-called "disinvestment" by the government.
Previous governments had made big claims - preceded by huge targets -about the sale of their stake in various public sector undertakings (PSU) and other industrial undertakings. This was ostensibly done to achieve the bigger objective of poll promise and the grandiose slogan that the "government has no business to be in business" and money raised from such sales got added to the government's coffers, supposedly helping reduce fiscal deficit. This pet slogan started with the P V Narsimha Rao regime soon after the historic policy shift of 1991 and has continued ever since.
But does it really achieve what it is supposed to?
In most cases, a majority of the government stake was picked up by the cash-rich government undertaking called the LIC. It was really a case of transfer of money from one pocket of the government to another. How did it help in practically shifting control from government to private hands? How do these "disinvestments" actually change anything?
Suuti selling - or rather, trying to sell - its stake to LIC is another futile exercise in the same way. If the government is serious about "getting out of business" the stake should be sold to private individuals or companies, not to another PSU. Big businessmen would want to buy into PSUs that are being disinvested, only if they are able to get a controlling interest. Why would a Reliance or a Tata want to buy minority stake in a PSU that will continue to be run by the government?
Krishan Kalra, Gurgaon
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