This is not the best of times for Mr Arun Shourie. There is not much the disinvestment ministry has to show. The cabinet committee on disinvestment has removed Indian Airlines and Air India from the sell-off list and the Shipping Corporation of India (with only two bidders) and the takeover of Instrumentation Control Valves Limited by Larsen & Toubro are poor substitutes. In any case, Indian Airlines and Air India privatization was stuck, thanks to arguments that the aviation sector is in bad shape. For the moment, pending privatization, Indian Airlines and Air India will be able to modernize their fleets, stuck as long as they were on the list. Fleet modernization makes sense only if privatization is indefinitely postponed, as is likely to be the case. The CCD had to return Scooters India and Bharat Pumps & Compressors to the heavy industry ministry, because there were no bidders. Nor are there bidders for Praga Tools, Hindustan Cables, Bharat Leather Corporation, Rochees Breweries Limited, National Industrial Development Corporation and Bharat Brakes and Valves. The Supreme Court has issued a notice to the government about privatizing Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited without parliamentary approval. The disinvestment ministry may do its best to convince Parliament (in response to a question) that privatization has led to insignificant job losses. Only 19 employees have been dismissed since January 2000.
But there is considerable opposition to privatization within the government. Had that not been the case, 46 Central public sector units slated for privatization would have led to greater receipts. Realizations have been Rs 1,868 crore in 2000-01 (target of Rs 10,000 crore), Rs 5,632 crore in 2001-02 (target Rs 12,000 crore) and Rs 3,348 crore (target Rs 12,000 crore). The target of Rs 13,200 crore in 2003-04 is also likely to be elusive. The causes are resistance to selling profit-making PSUs, caps on foreign direct investment, allegations of non-transparency through the strategic sales route, non-cooperation by administrative ministries and equity and other restrictions on the disinvestment process, apart from the unaddressed issue of allowing PSUs to bid for other PSUs. Instead of resolving these issues, the CCD has now incorporated a provision for employee buyouts. Employee bids (with at least 15 per cent of employees or 200 employees bidding), which can also be in consortium, will have a net worth criterion, but are exempted from turnover criteria and will obtain 10 per cent purchase preference. This muddies waters even further. Workers’ management may have been fashionable at one point in Yugoslavia, but look where that country is today. Hence, the CCD’s activities will be restricted to a few Indian Tourism Development Corporation hotels, Rashtriya Chemicals and the National Building Construction Corporation.