A decade and a half after embarking on an ambitious and very successful economic liberalisation programme, the Indian economy is thriving and appears well poised to achieve a pre-eminent position on the global stage. That vibrancy is well reflected in the bell-weather BSE Sensex which recently conquered the 13,000 points barrier. Now, there are hopes that the Sensex may well touch the 15,000 points mark by the end of the financial year. Wishful thinking perhaps, but given the unpredictability of our markets not beyond the realm of possibility.
However, one thing is certain - any progress on the disinvestment front from now on will further fuel the rally, valuations be damned. Perhaps, even lead the Sensex to the 20K mark?
The remarkable turnaround of the Indian economy from the verge of collapse at the turn of the 1990's to today's healthy position has been extraordinary, as has been the path traversed. Forces inimical to change and keen not to lose their political turf, cutting across party lines, have attempted to stymie the liberalisation juggernaut. However, like a true juggernaut, it has rolled on, crushing under its huge weight all those living in a time warp.
If one delves back even into the recent past, one will remember that Arun Shourie, the erstwhile disinvestment minister in the previous NDA led coalition government, had to fight tooth and nail not only with the members of the Opposition, but also with his colleagues in the government to push through some disinvestment.
Those engaged in the capital market will remember, and not too fondly at that, the abortive attempts made by the Government to partially disinvest its stake in Shipping Corporation of India (SCI) and National Aluminium Company (NALCO). In fact, in case of the latter, merchant bankers were reportedly roughed up by union members of the company when they sought to proceed with it.
Given these circumstances, what Arun Shourie achieved was commendable, but in a classical Indian political twist, he has now been placed in the dock over the disinvestment of a Government owned hotel in Mumbai.
Palaniappan Chidambaram, the current Finance Minister tried to sugarcoat the disinvestment pill by taking it out of the budgetary equation and placing it on the 'proceeds for social good' pedestal. So far so good, but after he bided his time and recently announced the partial disinvestment of the government's stake in Bharat Heavy Electricals Limited (BHEL) a state run company, all hell broke loose. Notwithstanding his weak reiteration that the government majority holding would never be compromised, his leftist coalition partners saw red. They retaliated by threatening nationwide agitations against the proposed disinvestment. A threat by a Tamil Nadu based political party, the DMK, a constituent of the ruling coalition, led to the Prime Minister disgustedly announcing that the disinvestment programme was being put into cold storage, at least for now.
So, what's the way out from this conundrum?
(Continued next week)