Red sparks fly over PSU public offers

This time compromise on functional autonomy of PSUs is being proffered as the reason.

The Left parties have hardened their stand on public sector disinvestment and are now opposing even offloading of shares through public offers on the ground that it compromises the undertakings' "functional autonomy".

The Left parties have said the functional autonomy of 35 profit-making public sector undertakings would be diluted if the government went ahead with its decision to sell up to 49 per cent of their shares in the capital market.

"There are many ways to mobilise resources for PSUs if they so want. We can go to banks and financial institutions. What is the need to go to the market?" said Dipankar Mukherjee, a leader of the Communist Party of India (Marxist).

In a statement after their meeting on October 27, the Left did not, however, make an issue of the 5 per cent divestment in National Thermal Power Corporation because its board had recommended the sale, but the decision was taken under pressure from the government and safeguards were needed to protect the autonomy of PSUs, Communist leaders said.

If divestment was left solely to PSU boards the funds raised could be used for the development of the public sector instead of going towards bridging the fiscal deficit, the Left parties said.

Functional autonomy of PSUs for the Left does not mean devolution of management and commercial freedom to profitable companies, which is how the ruling alliance's common minimum programme defines it.

Rather it means "profit-making PSUs be given the freedom to mobilise resources in the debt market without tinkering with public equity".

Its common minimum programme commits the ruling United Progressive Alliance to retaining "navratna" companies in the public sector even as they raise resources from the capital market. But the Left argues that allowing profitable PSUs access to the capital market could lead to privatisation through the back door.

The government might not have actually taken a decision to divest its stakes in 35 PSUs, including Bharat Heavy Electricals, Power Grid Corporation and Power Finance Corporation, just yet, but the Left has seen this as an opportunity to state its stand on the issue.