It is necessary to move as early as possible. The government has budgeted for Rs 69,500 crore of receipts from disinvestment and strategic sales this financial year. If this is not to put too much a strain on the pool of available capital, it will have to be spread out across the year. In general, the Centre’s record on matching its disinvestment targets have been poor. This was the case for most years under the United Progressive Alliance and also last year, the first of the National Democratic Alliance. There are many reasons for this. One is a general obsession with selling at the top of the market — selling off national assets at anything less than the best possible price is the kind of thing that causes bureaucrats and politicians to be extremely worried. But there are major negatives to this fear — it means that the finance ministry tends to wait for the stock markets to look good enough to satisfy them, and that may not happen in the time frame set aside. The government cannot make that mistake again.
In any case, there is every reason to hope that with this pro-active action, a pipeline of disinvestment can be set in motion that continues across various financial years. This will provide stability to the markets and allow investors to plan. Markets are thin, and the government should expect its disinvestment plans to drive the markets, rather than vice versa. In particular, primary stake sales, if priced attractively, might catch the fancy of the domestic investors who have largely been missing for the past few years. But there are important additional steps to be taken. For one, the government has to make sure that the assets it is putting on the block will be valued properly by investors. This will only happen if it also commits to ensuring that the corporatisation and professionalisation of the companies in question are stepped up.