Poor disinvestment

When the DMK came into power in Tamil Nadu, they did so riding on the many illogical promises they made during the campaign. They promised free TV's, cheaper grain, and lots of other free stuff, oh, including free electricity.

Then the DMK formed the government, and the question arose, how are we going to accomplish all these things with our limited money? I don't know the solutions they came up with for most of their promises, but I think they are planning to set up a TV factory in the state to build television sets to be distributed to the poor. All this is just to give everyone the idea of what kind of a mentality the DMK, much like most of India's regional parties, possesses.

So yesterday I heard the news that the Prime Minister had halted the entire disinvestment process that was underway, barring some. Why? Because the DMK which we spoke of is also a part of the United Progressive Alliance, and they threatened to pull out of the center if the Government decided to sell off the Neyvali Lignite Corporation, which is based in Tamil Nadu. The Commies, ever willing to stall any economic liberalization, readily aligned themselves with DMK.

So how much was the government planning to disinvest in NLC? Not 100, not 50 but a mere 10%! If a mere 10% disinvestment can light such a big fire under these peanut brained politicians, imagine if India indeed undertook economic liberalization at a much greater pace to replicate the Chinese success. This is the exact reason this is not happening, because all PSU's are full of unions, aligned with this party or the other, and because they have always worked in the luxury of an almost permanent job guarantee and almost never having to put in a really hard day's work, anything that would have changed this status quo would be seen as against their immediate interests.

The government is meant for running the affairs of the country, and not running its companies. While the government was needed to provide the stilts on which this country could grow in the middle of last century, it is now pretty obvious that India does not need those stilts as much as it needed then. The private sector is growing by leaps and bounds, and the Government, or rather the numerous small minded politicians should look at this as a welcome step in the country's growth, but unfortunately, it is now more about protecting their turfs.

So disinvestment brings the better business practices of the private sector, and it brings money to the government, but if that means a few disgruntled and incompetent employees, then you can be sure its red flags in the mind of the politician. You see, 99% of India's politicians can't see the big picture. They have never been required to do so, and they never will.

Farewell Disinvestment

Prime Minister Manomohan Singh on Tuesday put on hold all selloff decisions and proposals after Tamil Nadu chief minister and DMK supremo M Karunanidhi threatened to withdraw his party’s support to the UPA government over its decision to divest 10% in Neyveli Lignite Corporation (NLC). The reversal has come barely a fortnight after the Cabinet decided to sell 10% stake in NLC and Nalco, putting a question mark on other reform initiatives.

Although a terse statement issued by the PM’s media adviser did not say it in as many words, senior government officials confirmed to FE that even the ongoing process of disinvesting 10% stake in Power Finance Corporation and 15% in NMDC would now be halted.

While sale of stakes in these four PSUs — PFC, NMDC, NALCO and NLC — were cleared by the Cabinet, the government was considering divestment in a host of other PSUs including Coal India Ltd, BSNL, Concor and Shipping Corportion of India.

Withdrawal of support by the DMK, which has 16 MPs in the Lok Sabha, would not have led to the government’s collapse, but given the pro-active support the Left parties (with 60 MPs) extended to the DMK move, the Prime Minister obviously thought he could ill- afford a risk.

This is the second major setback to the UPA government’s disinvestment process. Last year, it had virtually abandoned the decision to divest 10% stake in BHEL, as the Left parties protested and also pulled out of the UPA-Left coordination committee.
------------------------------------------------------------

Local politicians couldn't give two hoots about the economy, and if the stock exchanges welcome the move by going into the red, what do they care? Similarly, India's flip-flops on its liberalization will not go down with the rest of the world. If India is aiming to be a global economy, it should act like one. India has been very unpredictable in its entire disinvestment process, much thanks to coalition politics. Newspapers from all over the world now report India's economic news, and this latest u-turn by the Government of India has not gone unnoticed. Why should any company invest in a country where its own Government can't control its ranks, let alone trying to manage an entire nation.

As for the CPI, I don't want to give any of my blogspace to these monkeys. They are a nuisance and hinderance to our progress and the earlier the people realize this, the better it is. As for the Queen of India, I hope she is repaid in kind for mollycoddling with all these sub-standard people to secure the Congress's hold on power.

India baulks at big sell-off

PROSPECTS for Indian economic reform dimmed on Thursday as the Congress party-led coalition Government bowed to pressure from a junior partner and cancelled recently announced plans for a number of privatisations.

The National Common Minimum Program, the policy blueprint for the UPA that was agreed in May 2004, ruled out the sale of majority stakes in navaratnas - profitable national champions. However, it appeared to leave the Government scope to divest minority stakes.

Political analysts said the reversal of a cabinet decision would further weaken Mr Singh, who - in spite of being hailed as the father of economic reforms in the early 1990s - has struggled to set a direction as Prime Minister since May 2004.

"The Prime Minister is not the man to impress his will on the Government," said Mahesh Rangarajan, a political scientist in New Delhi. "He's a brilliant scholar and incorruptible man, but is simply not schooled in realpolitik."

Just over two years into the Government's term, the Congress party leadership, guided by Sonia Gandhi, has suffered a loss of nerve in recent months and has been forced on to the defensive by the rising price of essential commodities such as pulses.

"Generally, Indian governments only have a window of about two years in which to get things done before they start backing off from tough decisions, but with this Government it's started even earlier," said Mr Rangarajan.