In its second-term in office, the UPA has the mandate to sell off bits and pieces of the businesses the state has come to own since independence. UPA II has lost little time in unlocking a significant revenue stream over the next five years to fund its ambitious social security agenda. The 13th Finance Commission has valued public undertakings in India at close to $400 billion, while independent estimates, although less optimistic, reckon their combined worth is at around $150 billion. Around 60 state-owned companies that make the cut for stake sales could fetch the UPA
Rs 150,000 crore over five years, helping to bridge a yawning fiscal deficit.
The exchequer is targeting revenues of Rs 40,000 crore this year through minority stake sales in Coal India, Bharat Sanchar Nigam Limited and Steel Authority of India among others. But private investors — both retail and institutions — have not shown big interest in the issues undertaken thus far, leaving state-owned insurers and banks to pick up the lion’s share of what is on offer. National Hydroelectric Power Corporation, Oil India, National Thermal Power Corporation, Rural Electrification Corporation and National Mineral Development Corporation have been sold at prices fund managers and the individual investors find steep. This makes for sound revenue generation from the government’s standpoint but leaves unanswered the issue of widening the gains of India’s growth story. The overarching opposition to disinvestment by the Left may have yielded to individual instances where UPA allies feel their constituencies are threatened. The Congress must, however, apply its mind to resolving the revenue-social equity trade-off if disinvestment is to become broader acceptable State policy.
Purists might argue that the disinvestment being undertaken is faux privatisation — the managerial efficiencies built into the latter do not obtain in the former. But public enterprises stand to gain from even minority stake sales. Listing requires quarterly disclosure, a more accountable way of doing business than the annual statements presented by these companies to their single shareholder. The tighter scrutiny of market players, both local and global, imposes a higher discipline in boardrooms and makes political interference a shade less pervasive. Tied to a move to have more floating stock from private as well as state-owned companies, disinvestment dons an impervious market-reform halo. More floating stock makes for deeper capital markets and the government must lead India Inc by example to spread the gains of rapid growth to a wider section of society.