FB   
 
Powered bysps
        Society for Policy Studies
 
 

 
Letting go
Posted:Jun 30, 2017
 
Print
Share
  
increase Font size decrease Font size
 
While the Narendra Modi government can list demonetisation, goods and services tax, direct benefit transfers, formal commitment to inflation targeting, and enactment of an insolvency and bankruptcy code, among its major reform initiatives, one area where there has been little action is disinvestment. The contrast here cannot be more stark with the previous NDA regime under Atal Bihari Vajpayee, which went the whole hog in outright privatisation, or “strategic sale”, of even profit-making PSUs — be it Indian Petrochemicals Corporation Ltd, Bharat Aluminium, Hindustan Zinc, Videsh Sanchar Nigam Ltd or Computer Maintenance Corporation. It is refreshing in this context to see the Union cabinet now granting “in principle” approval for the strategic disinvestment of Air India, the bleeding so-called national carrier.
 
 
There can, indeed, be no better candidate for privatisation than a company that last reported a net loss of Rs 3,587 crore on revenues of Rs 20,526 crore in 2015-16. It is nothing short of scandalous that since 2011-12, almost Rs 24,000 crore of taxpayer money has been infused as equity support into Air India — and even after that, its domestic market share has fallen from 19 per cent to 13 per cent, while accumulated debts have mounted to around Rs 50,000 crore.
 
 
The question to ask is: What took the Modi government so long to decide on sale of a PSU that is neither profit-making nor serves any strategic objectives? Yes, there are many sectors and routes that private airlines may not find economical to operate, but this can be taken care of through special incentives or subsidies. Likewise, there could be situations requiring emergency evacuations of Indian nationals from warzones. But the government could very well set up a separate specialised company, may be under the Defence or External Affairs Ministry, for such operations.
 
 
The Modi government is apparently planning to invite bids for Air India after hiving off the airline’s real estate assets to a special purpose vehicle, besides de-merging its profit-making maintenance repair and overhaul and ground handling services subsidiaries. That would be unnecessarily time-consuming. It makes better economic sense to sell the entire company, with all its assets and liabilities, after proper valuation. If the liabilities exceed the assets, let the bidder offering the least negative net value be given controlling stake.
 
 
Also, there should be no restrictions on the universe of bidders. A company like, say, Indigo, should not be denied an opportunity to bid just because it already has a 41 per cent share in the domestic market. Any possible abuse of dominant position can be addressed by the Competition Commission.
 
 
 
 
 
Print
Share
  
increase Font size decrease Font size
 

Disclaimer: South Asia Monitor does not accept responsibility for the views or ideology expressed in any article, signed or unsigned, which appears on its site. What it does accept is responsibility for giving it a chance to appear and enter the public discourse.
Comments (Total Comments 0) Post Comments Post Comment
Review
 
 
 
 
spotlight image Since Prime Minister Sheikh Hasina assumed office again in Bangladesh in 2009, bilateral relations between New Delhi and Dhaka have been on a steady upward trajectory.
 
read-more
  Nearly 58 per cent of the about 600,000 Rohingya refugees in Bangladesh are children who suffer from severe malnutrition, a UN report released said.
 
read-more
A unique and passionate gathering of acrophiles, or mountain lovers, took place in neat and picturesque Aizawl, the capital of Mizoram state in north-eastern India in September.
 
read-more
India’s foreign policy under Prime Minister Narendra Modi has attained a level of maturity which allows it to assert itself in an effective manner. This is aimed at protecting the country’s national interests in a sustained way.
 
read-more
With over 100 incidents of braid chopping reported in different parts of Kashmir, there is widespread fear and anger among the people.
 
read-more
According to the National Bureau of Statistics, China's GDP expanded 6.9 percent year on year in the first three quarters of 2017, an increase of 0.2 percent above that of the corresponding period of last year.
 
read-more
As political roller coasters go, there is none as steep and unpredictable as the one shared by the United States and Iran.
 
read-more
In West Asia, the end of one war paves the way for the next. Raqqa, the Syrian capital of the self-styled Islamic State (IS), has fallen to a coalition of rebels, the Syrian Democratic Forces that is backed by the United States.
 
read-more
On “Defining Our Relationship with India for the Next Century”
 
read-more
Column-image

Title: The People Next Door -The Curious History of India-Pakistan Relations; Author: T.C.A. Raghavan; Publisher: HarperCollins ; Pages: 361; Price: Rs 699

 
Column-image

Could the North Korean nuclear issue which is giving the world an anxious time due to presence of hotheads on each side, the invasion of Iraq and its toxic fallout, and above all, the arms race in the teeming but impoverished South Asian subcon...

 
Column-image

Title: A Bonsai Tree; Author: Narendra Luther; Publisher: Niyogi Books; Pages: 227 Many books have been written on India's partition but here is a firsthand account of the horror by a migrant from what is now Pakistan, who ...

 
Column-image

As talk of war and violence -- all that Mahatma Gandhi stood against -- gains prominence across the world, a Gandhian scholar has urged that the teachings of the apostle of non-violence be taken to the classroom.

 
Column-image

Interview with Hudson Institute’s Aparna Pande, whose book From Chanakya to Modi: Evolution of India’s Foreign Policy, was released on June 17.

 
Subscribe to our newsletter
Archive