Disinvestment: Time to act

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Of all the governments that have ruled India since Independence, the Narendra Modi government is the most reform-oriented. It has taken up all kinds of reforms in the social, political and economic spheres. But one of the avowed reform goals of the government that has suffered over the past couple of years is disinvestment. Two high-profile stake sales — Air India and BPCL — are hanging fire for quite some time now. The government must wrap up both quickly. They would rid the government of long-standing headache and can also part fund projects Prime Minister Narendra Modi announced on August 15.

While any question of disinvestment or privatisation is a politically sensitive topic, it is also an issue that is somewhat dependent on the market mood. The Indian equity markets are going through some of the best times in history riding unprecedented bull run that has brought retail investors out in hitherto undreamt of numbers to participate in the wealth generation exercise. The government must not let this opportunity pass and clinch both deals quickly. It would also set the mood among the retail investors to enthusiastically participate in the mega LIC IPO that has been planned in this financial year.

It might be recalled that the Atal Bihari Vajpayee government had only a fraction of party MPs in the Lok Sabha during its tenure between 1999 and 2004. With only about 180 MPs, the government pushed through the big-ticket privatisation of BALCO, VSNL, Hindustan Zinc and ITDC hotels. The current government should take a decisive step and proceed with the two big deals. It would not only help get rid of the albatross around its neck but also lead to efficient utilisation of the huge assets of these two companies. Last but not the least, successful disinvestment would demonstrate the government’s sincerity in getting out of managing businesses and attract more investors into the country.