Friday,
November 1, 2002, Chandigarh, India
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The mystique of disinvestment: some hard facts & critical issues The views expressed by Hari Jaisingh in the article
"The mystique of disinvestment" (Oct 25) are highly appreciable. No doubt, PSUs have caused a huge drain on the public exchequer and hence they need to be streamlined. However, privatisation should not be considered as the only solution to all problems. Rather granting greater autonomy and reducing bureaucratic and political control, thereby allowing PSUs to run on a sound commercial basis and other measures essential for reviving PSUs are the need of the hour. There should be disinvestment, but in necessary cases. Profitable companies are now being privatised and loss-making ones are being retained. This has resulted in a situation where "we privatise the profits and nationalise the losses." Take the case of Air India, which was set for privatisation. However, when all formalities were completed, no bidder came forward. The main problem with the disinvestments process is the under-valuation of assets and shares. Once an enterprise is declared for sale, its share value starts declining. Take the example of VSNL. As against the share price of Rs 168 on the day of sale, the price realised by the government was Rs 202 per share. The government has shown it as a great achievement. But the fact is that one month before the declaration of privatisation of VSNL, its share price was Rs 221.
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