NTPC's buying out NHPC will result in Rs 4,500 crore accruing to theGovernment, Rs 2,500 crore of which will go towards pruning the government'sdeficit this fiscal. The problem is that Rs 4,500 crore is being transferredout of the power sector, and the money will meet the expenditurerequirements of the Government. Obviously, parting with Rs 4,500 crore willhurt NTPC's expansion plans, although there is no denying that it is gettingNHPC's assets cheap.

The Government has also thought through a plan for ensuring that NTPC is notstarved of funds. The thermal giant will therefore hive off its plants intospecial purpose vehicles, and sell off 51 per cent of these SPVs. That way,NTPC will get its funds. In short, what is being done is forcing NTPC tosell assets in order to fund, not its own needs, but that of a profligateGovernment. It must also be noted that NTPC is not in the disinvestmentlist, and has an extraordinarily good return on capital employed. Does itneed to resort to selling its good assets to fund expansion?

So long as the Government lives way beyond its means, and is unwilling toextend the process of economic reform to its own activities, such so-calledinnovative deals will continue. It may be, as the minister for power said,that it is merely moving money from one pocket of the government to another.The trouble is, money is being moved from the pocket that funds investmentand growth to the pocket which finances consumption and inefficiency.