If one considers that the equity divestment programme has been at least partially successful, so it would be with debt. While there would be plenty of takers for the debt securities of profitable giants like ONGC and Gail, there would be few who would willingly expose themselves to the likes of NTPC even at a discount. Concerns that the government will eventually be saddled with NPAs are also equally applicable to both equity and debt disinvestment. Yet, given that despite these concerns, the government has gone ahead with the first leg of theprocess, so it should with the second.

In fact, the government could use the wisdom gained from the divestment of equity to realise much better bargains from debt divestment. Cases like the financial restructuring of Nalco could offer interesting options regarding the mode of disinvestment. PSUs that have a good profit potential but are saddled with too much equity could be encouraged to convert part of it to debt and the government could sell the securitised debt instead of selling equity directly. While the equity market is still full of uncertainties, debt has many takers, because banks are flush with funds. Innovative schemes such as this would not only enable PSUs to turn healthier but also enable the government to realise higher proceeds.