Derailing Disinvestment

Updated: Sep 18 2003, 05:30am hrs
Within hours of the Supreme Court verdict on the disinvestment of Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd, requiring the government to get the appropriate approval from Parliament, the Congress party put out statements that they would oppose the disinvestment of these two oil public sector undertakings in Parliament. This is a hypocritical stand taken by a party that spearheaded disinvestment and now pursues it in states like Punjab and Karnataka. It is here that the SCs verdict, which may well be limited to HPCL and BPCL, could well change the course of PSU disinvestment, not only at the central but also at the state level. The verdict requires the government to get parliamentary nod for the disinvestment of HPCL and BPCL instead of cabinet approval (the PSUs were created through a Parliamentary legislation in 1974). Now, like HPCL and BPCL, there are other PSUs at the central and state level which were created through legislative Acts. The verdict can be taken as a precedent for future disinvestments and any opposition party can derail the entire process. Disinvestment of PSUs requires consensus among the political parties and it is here that one needs to ask as to who are the real owners of such PSUs. It cannot be the legislature as any Act that is cleared at the state or central level is only an enabling provision which brings the PSU concerned into being. With the executive being the real owner, matters should be left to the government in power to take decisions pertaining to any PSU. After all, it is the Union cabinet alone which can overturn an earlier cabinet decision.

With vested interests at play, the government should have taken greater care in preparing its brief before the countrys highest court and not allowed its case to be lost by default. For disinvestment minister Arun Shourie, who has single-handedly made a convincing case for privatisation, pushing through difficult cases like Balco, VSNL and Maruti Udyog Ltd, the need to now go to Parliament is yet another hurdle that requires to be crossed. The ministry would now have to think twice before pursuing or initiating the sell-off of even such PSUs where the SCs verdict may not be relevant because political perceptions may now get coloured by the Courts judgement. This is something that both central and state governments will now have to deal with. Little wonder then that the despondent Mr Shourie feels that this (the verdict) will have far-reaching consequences, not only for disinvestment in these two PSUs but in other matters also.