A K Bhattacharya: Disinvestment is back on the agenda

RAISINA HILL

It all started with Prime Minister Manmohan Singh's address at the Congress Working Committee (CWC) on May 16. The meeting was significant as it was held at the end of the Budget session of Parliament and coincided with the completion of one year of the government led by the United Progressive Alliance (UPA).

The official briefing on the meeting was all about how the mild-mannered prime minister showered praise on the leadership of Congress President Sonia Gandhi and how he found that running a coalition government was fraught with difficulties because of ideological differences among the supporters and partners of UPA.

But late in the evening there was another briefing on what Singh said at the CWC meeting. That briefing brought out two significant points. Most newspapers picked up the point on how Singh gave a rating of six out of 10 on his government's performance during the first year.

But the more significant point was on how the prime minister talked about the need for once again pursuing disinvestment of government equity in public sector undertakings (PSUs).

Who held this special briefing was immaterial. What seemed to be of greater importance was whether the prime minister meant what he said. Was he serious about once again pursuing disinvestment of government equity in PSUs?

Hadn't the UPA government given up disinvestment of at least profit-making PSUs in view of protests from the Left? So, what could have changed that the prime minister felt bold enough to make such an announcement?

The answer to these questions was available within 10 days. On May 26, the Cabinet approved a proposal to sell 10 per cent of Bharat Heavy Electricals Limited's (BHEL's) total equity. BHEL was a profit-making PSU. Even though the decision was accompanied with usual caveats such as transferring the proceeds from the sale of equity to the national investment fund, the fact of the matter was that the UPA government had made a fresh start as far as its disinvestment policy was concerned. And if officials in different economic ministries are to be believed, a list of profit-making PSUs has already been prepared, which will soon be considered for disinvestment in the coming weeks.

If this was not enough, the Cabinet also decided to free up prices of natural gas for all sectors except those which produce power and fertilisers. This has raised the hope that the government will now muster enough courage to take the much-awaited decision to raise the prices of other petroleum products like motor spirit, diesel and liquefied petroleum gas.

And a similar decision to free up prices of coal to be sold to producers of aluminium and paper is also on the cards. In short, the UPA government has suddenly decided to move fast on proposals to free up prices of PSU products.

The logic seems to be clear. While disinvestment of government equity even in profit-making PSUs will be pursued with renewed vigour, the government will remove price curbs on products being sold by the state-owned companies.

Politically, this seems to have made sense. The Left continues to sulk at the UPA government's decision to go ahead with the proposal for disinvestment of equity in BHEL. But it cannot object to the government's move to allow the oil and coal PSUs to raise prices of their products and improve their bottomline.

It is a re-run of the earlier policy of give-and-take, when the government went ahead with the decision to allow higher foreign investment of up to 74 per cent in the telecommunications sector, in return of a promise to provide a 9.5 per cent interest rate for deposits in the employees provident fund.

The foreign investment limit in the telecommunications sector was raised some weeks ago. And the promise to raise the Employees Provident Fund (EPF) interest rate to 9.5 per cent was fulfilled last week.

But there is now a crucial difference in this policy of give and take. The UPA government has become a little more aggressive in enforcing whatever policy changes it wants. Manmohan Singh's statement on disinvestment in his speech at the CWC meeting was a clear sign of that aggression.

It is reasonable to assume that this aggression will only increase in the coming weeks. One, the prime minister seems to have recognised that time is running out. One year is already over and his government must expedite the much-needed economic reforms if the reformist credentials of his government are to be protected.

And, more importantly, the UPA government may have sensed the Left's political compulsions. For the Left, the bigger enemy is the National Democratic Alliance (NDA) or its chief constituent "" the Bharatiya Janata Party. The Left will try its best to ensure that the NDA does not come to power at the Centre.

If this goal can be achieved by keeping the Congress-led UPA in power in New Delhi, it will do so. Thus, the Left might complain about disinvestment, but that will not be the reason for it to pull down the UPA government. It is not the Left, but the Congress' desire to look for fresh political equations that might rupture the relations between the two political groups.