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The Rediff Business Interview / G V Ramakrishna

'Government should sell PSU stocks now without waiting for the market to improve'

Soon after the CII session on Saturday, Disinvestment Commission chairman G V Ramakrishna spoke to Syed Firdaus Ashraf. An excerpt from the interview.

Are you satisfied with the steps taken by the government after you submitted the recommendations of the Disinvestment Commission?

I have made several recommendations to the government in my report and I feel the government is seriously looking into the matter. And, I expect that the government will clear many of the recommendations soon.

There is a view that India should have a minister for privatisation in place of the Disinvestment Commission. England under Margaret Thatcher had one such minister.

It is for the government to decide. We are a commission and we have made our recommendation. The government has its internal mechanism that can deal with the recommendations made by us. There are groups of ministers and groups of secretaries who look into such matters. If they need further changes the government can take further steps to improve that. So, I cannot comment on whether the government needs a privatisation minister.

Do you think privatisation of PSUs is better than disinvestment?

It is difficult to say. It has to be a joint decision where everybody agrees on one point. But before that I think the government will need a committee and some ministers will have to seriously look into this matter. But, I think if they streamline the internal procedure of the bureaucracy, then it can speed up the privatisation procedure.

Will mere selling of equities of the public sector companies help the government to improve its fiscal position?

No, I think the government will have to look into other steps also besides the selling of PSUs' equity. There are things like non-plan expenditure and subsidies which everybody mentions while talking about controlling the fiscal deficit. I think the government must look into such matters.

Will sale of PSU equity boost the stock market sentiment?

I think the PSU share prices will attract the small investors. They will surely abandon their saving schemes and invest in these stocks as it will result in a lucrative investment. And that can result in boosting the economy.

Is the time right for the PSU stocks to enter the stock market?

You see, if you wait for the market to do well, then there is no need to sell. So, I think you have to sell now. You can't wait and say that let the market improve. As soon as the government decides to sell the shares, they can approach the bankers and decide on their future strategy.

Trade unions criticise the Disinvestment Commission saying that national enterprises built during the Nehru era will be gobbled up by the private sector.

We are not privatising these companies. So I don't know what is their objection. We are making them work better and the whole object of the Disinvestment Commission is to help these companies to run efficiently. These companies are not going to die after we disinvest. So, it is wrong to say that these companies will be privatised and will be taken over by the private sector.

You have said several times that the Foreign Investment Promotion Board's relevance must be look into since it will be of no use once the Trade Related Investment Measures come into affect? Please elaborate.

I have stated that the TRIMS agreement says that any foreign company can invest in India, without any limitations, and the government cannot impose export obligations. A whole lot of conditions we normally impose today can no longer be imposed on the foreign companies after December 1999. The agreement also calls for national treatment for foreign companies. So, I feel that we need at least some legal experts to say what this means, and how we are going to prepare for this challenge. But the problem is that we are still not studying this agreement carefully.

Do you think some measures must be taken to support the Indian industries under the World Trade Organisation agreement?

I think the Indian industry must always be supported to face global competition. It cannot survive without a proper policy supporting structure. For instance, why does not the government have a single bankruptcy law to deal with the bankruptcy cases? We should also quickly enact anti-trust laws for sharpening the forces of competition as in the United States and European Union.

If we fail to set up a special department machinery to deal with WTO agreements, we will lose by default on many fronts. And this happened in the case of seeds and patents cases recently. So, I think the creation of a fresh anti-dumping law would be an added advantage to us and at the same time it will also help to control the quality of the imported products.

Report on CII-organised seminar on PSU disinvestment

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