NDTV
spoke to economist Jairam Ramesh to know how the VSNL controversy
could affect the disinvestment of public sector companiesership in India.
NDTV:
VSNL was seen as a big-ticket success story.
Now it seems to have taken a little bit of a hit. How do think it would
impact on the entire disinvestment process?
JR: First thing, one comment on
VSNL. I think managerially, it is certainly defensible. Commercially,
it is certainly desirable. Legally, it is sustainable. But optically,
it is disastrous. The timing, the way it was done – from the PR point
of view it was disastrous. What is in fact most depressing is that one
of India’s most ethical, high-value, civic-minded industrialist, Ratan
Tata, is in the eye of this controversy. My own view is that this controversy
was wholly avoidable. I think this is proxy war and cross-border terrorism
going on within the government and Mr Pramod Mahajan has really, really
crossed the line on this.
NDTV: Whether
it is proxy war or not, the bottom line is that the investors would
start rethinking and the ministries would start rethinking on what’s
to be done with the companies which are going up for sale?
JR: I think there is a policy lesson
here – that PSUs have cash reserves, they have locked assets in the
form of land for example. I think Mr Arun Shourie and the Disinvestment
Ministry will have to take a wider policy decision as to how they are
going to treat the cash reserves of many of these cash surplus companies
and the land assets that are available with the profitable and the not-so-profitable
public sector companies.
NDTV: So
the learning curve still continues?
JR: I think the learning curve certainly
continues. It has certainly caused a controversy. I think the Company
Law Board will be approached and they will go to the courts. Again like
the BALCO case, for the next six months VSNL will be in the eye of a
storm. But I think if there are other privatisations that are going
on at the same time, the hotel privatisations for example and the oil
PSU privatisations, then VSNL, as you say, could just be a blip on the
screen.
NDTV:
But such the Minister’s reactions raise questions
whether the government really wants to let go of business?
JR: No minister or a bureaucrat
wants to let go of the public sector companies. Mr Arun Shourie is a
freak, he’s a maverick. But no minister, no civil servant – I have worked
in the government for 20 years – wants to get rid of a public sector
company. Mr Mahajan’s words were ‘it’s my company, it’s my money’. This
1,200 crore is not his company, it is not his money. Incidentally this
Rs 1,200 crore – nobody has remarked on – is not the result of any great
efficiency of the VSNL. VSNL was a monopoly. These are monopoly profits
that were parked in VSNL by charging consumers five to six times the
international price. It cost five times more to make a call from here
to the US than from the US to India.
NDTV: ow
the question is whether BPCL, HPCL disinvestments would be big ticket
success were they to happen at all. Ram Naik, is not known to completely
support the privatisation process, so HPCL and BPCL could get delayed
JR: What is happening, what you’re
seeing here is a corporate warfare. I think what you are seeing in VSNL
is also, as I said, proxy war. It’s basically corporates or disgruntled
corporates – those who rig the rules of the game – showing their political
muscle. Surely this is also going to happen in the case of the oil companies
which are also seen to be strategic companies. So there is bound to
be more than the usual political interest.
NDTV:
A lot more cash reserves.
JR: A lot more cash reserves. Again
you have administered pricing, monopoly pricing and so on and so forth.
A lot of locked assets like land and in some other business that they
do. So I think it has to be handled a little carefully and my advice
would be to hasten slowly as far as the oil companies are concerned
NDTV: Looking
at examples of disinvestment worldwide, does this kind of episode have
a wider implication?
JR: The only criticism that I have
of the privatisation process is that it has not evoked any international
investor interest at all. In all other countries, privatisation means
getting in foreign investment. It’s only in India that privatisation
has meant selling off public sector companies in favour of Indian private
sector entrepreneurs or public sector companies. So there has been no
additionality of resources, there’s been no great foreign investment
inflow of the type that took place in other countries.
NDTV:
Yet it has acted as a trigger for a lot of PSU
stocks?
JR: Yes sure the PSU stocks have
increased in value and fund mangers are suddenly saying that privatisation
is one of the few success stories of this government. But big companies
are not interested in our privatisation programme. In fact, this is
one of the biggest problems in our privatisation – it is not evoking
any international interest. Now with all the travel advisories out –
with the US, Britain, the UN and others evacuating their people, the
interest in India is going to be even less than it would otherwise have
been.
NDTV: That
is something which will have wider implications. Will it hit the disinvestment
process?
JR: Today India is a bad word. You
open any international magazine, go to any international channel and
you are seeing the fear of a nuclear war. People are being asked to
leave India. In this process to go and sell India, even though you want
to sell it on a success story like privatisation, it’s going to be very
very difficult.
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