Though it started off slowly, disinvestment has turned out to be one of the government’s bigger success stories with R24,329 crore being mopped up already. This is the highest ever achieved since the process began in FY92—the maximum so far has been R23,957 crore in FY13. The biggest breakthrough was, perhaps with the help of the Sangh parivar, get Coal India Limited’s biggest union, the Bharatiya Mazdoor Sangh, to not oppose the sale—the 10% stake sale fetched R22,558 crore on January 30. The UPA government’s divestment plans went for a toss last year precisely because it could not get the Coal India unions to agree to the sale. With close to 8 weeks still left in the disinvestment calendar, there is more to be got. As FE reported yesterday, the government is slated to garner another R3,000 crore by selling a stake in Power Finance Corporation and Rural Electrification Corporation next week. There is also a strong pipeline for the coming months, including the stake sale in the oil behemoths ONGC and IOC, and then there is BHEL, MOIL, Nalco and NMDC. The disinvestment programme has suddenly started appearing more credible.
The government now needs to move to the next step and utilise the funds properly. Even the Sangh parivar-affiliate, the Swadeshi Jagran Manch (SJM) in its budget wish-list, The Indian Express reported yesterday, has said that the disinvestment money should be used only for asset building. The national co-convenor of the SJM, Ashwani Mahajan, may have exaggerated it by saying, “You don’t sell family gold to buy grocery,” but there can’t be two views on the fact that the proceeds from PSU stake sales need to be used in capital investments like creation of irrigation facilities or building transport infrastructure. Finance minister Arun Jaitley, therefore, would do well to create a Disinvestment Commission type of structure—a lot less formal, though—which should prepare a roadmap for disinvestment, and allocate these funds for asset creation. Indeed, that matches up with the current need to drive up investment in the economy through public funds as most private sector infrastructure players do not have the balance sheets to fund an aggressive capex programme. Though a National Investment Fund (NIF) was created in 2005 for this very purpose, the money was frittered away on programmes like MGNREGA, JNNURM, APDRP and a few others—while the results of programmes like the Indira Awaas Yojana, also funded through NIF have been good, the same cannot be said for either MGNREGA or JNNURM and APDRP which created no assets or discernible change on the ground. Given the success of the NHAI programme, the government would be well advised to use divestment receipts to do viability gap funding or even build roads on an EPC basis. That is the best possible use of the family silver.