In the second innings of its government... UPA is on the right track, carrying forward the reforms... Despite the left's agreement for disinvestment of loss making government sector undertakings, UPA had not stepped forward on this front in it's last tenure...Government received only Rs.6701.49 crore from divestments during 2004-08, in comparison to Rs.26424.34 crore during 2000-04 in NDA's tenure.
Now, with a strong and better position in UPA, Congress has no excuse for not moving forward. However, the FM has already requested seven ministries including Telecom, Mining, Power, Commerce, Aviation and Coal, to submit proposals on disinvestment. Coal india limited, the largest coal mining entity in the world and the one which accounts to nearly 45% of the national electricity production, is in relatively advanced stage for disinvestment through IPO and is set to raise around Rs.6000 crore from a sale of 10% stake. Even other CPSE's(Central Public Sector Enterprises) are most likely to take the IPO way for divestment.
In my view, they should even consider the options like strategic sale and PPP(Pubiic private partnerships), which would also enhance the managerial and technical capabilities along with the financial benefits. In an IPO scenario, the investors are mostly concerned about the financial outcomes, i.e., the earnings part. where as in the other scenarios, a profit making private enterprise would actually look it from the operational perspective and would concentrate on enhancing the operational and technical efficiencies of the CPSE's. The reason for success of the CPSE's would then change from "MONOPOLY" to the "COMPETENCY"... which is more sustainable.
It would be a better idea for government, to roll out the divestment plans in phases... keeping in mind, the absorption capacity of the market. I mean, If all the IPO's are rolled out in closer time periods, the individual investors could prefer these to IPO's of India Inc. (as safer options, given the weaker investor's sentiments)... and as a result, MF's and IPO's of other private corporations would be left out with lesser no. of investors, making it difficult for them to close the IPO's successfully.
I liked it when pranab said, "Higher involvement of private entities is the most important reform he is planning to bring" as response to a question.
Let's see how "HIGHER" can he take it to...
Lets hope for no more political dramas like singur...
and for a matured and collaborative approach of political and corporate entities.
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