Divestment saga: One step forward, two steps back

The net result is that the political leadership’s ability to get on with disinvestment has become a test of its ability to vanquish this germ within the body politic that seeks to kill the entire economic reforms programme.
The test, or rather the contest, within the ruling dispensation will continue in the year to come as well.
In February, the government cleared IBP’s sale to Indian Oil Corporation and Videsh Sanchar Nigam to Tatas. The next week, Paradeep Phosphate was sold below the reserve price in a politically very bold move. And a fortnight later, Jessop & Co was sold to Ruia Cotex.
The sale of Hindustan Zinc to Sterlite Industries a month later was followed by a small pause. But the action picked up again in mid-May, when Suzuki Motors agreed to a control premium of Rs 1,000 crore for Maruti Udyog. Suzuki also agreed to underwrite the public issues of government.
Later in the same week, Indian Petrochemical Corporation was sold to Reliance Industries, overriding objections of monopoly and misgivings of fertiliser minister SS Dhindsa.
Along the way, more than a dozen hotels of ITDC and Airport Centaur, Mumbai, were also sold. Oil PSUs HPCL and BPCL were to be sold and so were Nalco, Shipping Corporation of India, Engineers India, National Fertiliser and Hindustan Organic Chemicals and a clutch of smaller PSUs.
In June, political opposition to the sell-off moves started gathering steam. Petroleum minister Ram Naik found allies in defence minister George
Fernandes and human resources development minister Murali Manohar Joshi. Fertiliser minister SS Dhindsa was anyway on his side and the Swadeshi lobby was already convinced that privatisation of profitable PSUs was equivalent to selling family jewels.
In the subsequent months, as Nalco’s privatisation process began, mines minister Uma Bharati too joined hands with what had now come to be known as “anti-disinvestment� lobby. Politicking in Orissa saw local opposition build up to Nalco’s privatisation as well, making progress even more difficult.
A Cabinet reshuffle in June saw a pro-reforms Arun Jaitley out of the ministry, and Jaswant Singh, cool towards Shourie, replace Yashwant Sinha as finance minister. M/s Shourie and Co preferred strategic sales of both HPCL and BPCL but the Naik-Fernandes group preferred market offerings, with equity expansion for BPCL.
A three-month period of divestment inaction between September and December cooled passions, produced a compromise of sorts but could not give divestment the momentum it had gained and lost.