AICC spokesperson slams govt’s disinvestment strategy for CONCOR
The Congress Party has criticised the government’s disinvestment from Container Corporation of India Ltd. (CONCOR) in a party briefing held on Monday. CONCOR is a Navratna railway public sector undertaking (PSU) and is currently a market leader in domestic container transport.
All India Congress Committee (AICC) spokesperson, Gourav Vallabh, raised concerns surrounding the method of the Modi government’s disinvestment from CONCOR and hinted towards possible detrimental implications of this move.
CONCOR commenced its operations in 1989, taking over the existing network of seven Inland Container Depots (ICDs) from the Indian Railways. Since then, it is now a market leader with the largest network of sixty ICDs and provides inland rail transport for containers and has expanded to cover management of ports, air cargo complexes, and cold-chains.
The Modi government has given its nod to sell a 30.8 per cent stake out of its 54.8 per cent holding in CONCOR to strategic buyers.
Vallabh questioned the reason for disinvestment and asked, “Why a Navratna company that is of strategic importance, consistently generating a profit and declaring average dividends of ₹365 crores per year in the last 4 years, is deciding for disinvestment?”
CONCOR has over sixty ICDs, and twenty four of them are situated on the railway land. He questioned the government’s decision to reduce the land licensing fees (LLF) from existing 6 per cent to 2-3 per cent, and increase the lease period from 5 years to thirty-five years. He asked, “Is the proposal to reduce the LLF an indirect way to hand over developed government land to private parties for the long term?”
In addition, Vallabh remarked, “CONCOR is a zero debt company with consistent total incomes, net profits, and dividends. For paying 99 per cent upfront lease, it has to raise debts of ₹3500 crores. Debts will directly hurt the valuation. Is the entire transaction planned to reduce the valuation of CONCOR?”
The AICC spokesperson highlighted the possibility that such haphazard disinvestments by the government can create monopolies and oligopolies with a considerable amount of market power. “How will the government ensure that these giant firms do not exploit this monopoly for commercial gains?” he questioned.
In his response to Congress’ criticism, BJP spokesperson Gopal Agarwal said, “BJP’s policy for disinvestment is that the government has no role to be in business. Professional and business decisions of companies, whether private or government, need to be taken on professional considerations.” "You cannot wait for a company to be destroyed and then go for disinvestment, like the Congress did for Air India. In that case, there will be no takers. When the company is a growing concern, only then it gets a proper valuation,” Agarwal told Hindustan Times.