Avoidable hurry

As the government approaches the last quarter of fiscal 2013 in a scramble to balance its books, it is time for some heavy-duty action on the disinvestment front. There is considerable disquiet in the parent ministries of disinvestment targets such as SAIL, BHEL, NTPC, OIL, EIL, NALCO, etc as these PSU blue chips are trading at multi-year low valuation multiples. The ministries’ angst is understandable but cannot be rationally justified as these PSU giants have fallen out of market favour for a variety of factors; some beyond their control, some their own making.

The finance ministry is leaving no stone unturned in its efforts to achieve this year’s target of R30,000 crore. It is banking on the support of LIC which saved it a major embarrassment last year during the ONGC issue. Much criticism followed that action of LIC, but it seems the insurer is ready with a bigger war chest and overt support from the government, which has increased the equity holding cap in a company to 30% only for it. So the modus operandi seems clear. Put up as many of these PSU for disinvestment as possible while LIC stands as the investor of last resort for these issues.

If R30,000 crore was all that the government was looking to garner this year, one wonders about the methods employed. A cursive glance at the list of issues up for divestment would indicate

... contd.