When Disinvestment Lost Its Momentum

Updated: Dec 29 2002, 05:30am hrs
For disinvestment, 2002 marked a journey from high hopes to despair. When the year began, big-ticket privatisation had become a fact of the countrys economic life. It was not only happening, but also catching speed. And then, suddenly, the old guard struck. It began in the middle of the year with murmurs of protest from the administrative ministries, which had already lost control, or feared to lose control, over the public sector undertakings (PSUs) under their control, such as the ministries of coal and mines, communications and, most importantly, the ministry of petroleum and natural gas.

The anti-privatisation lobby started roaring when defence minister George Fernandes joined forces with it, opposing oil sector privatisation, citing a variety of reasons, including those relating to national security. The swadeshi fanatics joined in the fun, with S Gurumurthi mouthing hackneyed phrases and socialist shibboleths like The family silver is being sold to pay the grocers bill and Profit making PSUs should not be privatised. All this pleased petroleum minister Ram Naik and helped to keep oil PSUs in his clutch.

Another factor was the elevation of home minister L K Advani as deputy prime minister. Important ministers of the ruling National Democratic Alliance started looking upon him as the prime minister-in-waiting. Since Prime Minister Atal Behari Vajpayee is pro liberalisation and privatisationdisinvestment minister Arun Shourie is his appointeeanti-privatisation ministers juxtaposed Mr Advani against him. One of them, Ananth Kumar, had the gall to dare the Prime Minister at a cabinet meeting, something unprecedented in the history of India. September 7 was the denouement, the day when the cabinet committee on disinvestment (CCD) deferred disinvestment in oil PSUs for three months.

Unfortunately for these ministers, Mr Vajpayee gave up any thoughts of resignation, indeed if he had had any, and, fortunately for economic reforms, started asserting himself. On a number of occasions, beginning on Gandhi Jayanti (October 2), the Prime Minister made it amply clear that he remained the boss and privatisation could not be written off while he was at the helm of affairs. It was at his behest that the concerned ministers met on December 6 to reach a consensus on oil sector privatisation.

In this milieu, 2003 opens with a great deal of uncertainty, for 2002 has proved beyond doubt that the opponents of privatisation have the capacity to strike at any moment. In the first half of the calendar year, the government was able to sell off important PSUs such as Indian Petrochemicals Corporation Ltd (to Reliance for Rs 1,491 crore), Hindustan Zinc Ltd (to Sterlite for Rs 445 crore) and Videsh Sanchar Nigam Ltd (to the Tatas for Rs 1,439 crore). Besides, it received Rs 1,000 crore for conceding control over Maruti Udyog Ltd to Suzuki Motor Corporation. Yet, in the second half of 2002, there was no privatisation. This only proves the point that the nexus between anti-sale politicians and the swadeshi lobby can make a deadly combination at any point of time.