Letter to BS: What could be strategy behind govt move to sell stake to PSU?

This refers to the article “Strategic sales sans strategy” (April 24) by A K Bhattacharya. The title of the column tells it all. There have been many instances in the past when the government has shed its majority stake in one public sector undertaking (PSU) in favour of another; however, no strategic private player has been roped in for diluting majority stake in a PSU. Typically, this sort of divestment may not qualify for strategic sales, though the government maintains that some of these divestments, mainly Power Finance Corporation picking up stake in Rural Electrification Corporation, is aimed at bringing out the synergies and thereby enhancing performance.


The previous government did make strategic disinvestment in a few PSUs — namely, Hindustan Zinc Limited, Videsh Sanchar Nigam Limited, BALCO etc — during 1999-2004. Since then the big ticket strategic disinvestments in PSUs have not been seen. The reason being the lack of consensus among the political parties with regards to the necessity and pace of strategic sales. If the government of the day embarks on strategic sales of PSUs, it may have to pay a political price for it, as opposition parties would leave no stone unturned in embarrassing the government and building a counter narrative.


What is required is to make sustained efforts to forge some consensus among political parties on the path and pace to be adopted for disinvestment in PSUs. This would certainly help the government to mop up the disinvestment proceeds while enabling the organisation concerned to scale new heights with the investment and technology brought in by strategic the investor.

Sanjeev Kumar Singh,  Jabalpur

Letters can be mailed, faxed or e-mailed to: 
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg 
New Delhi 110 002 
Fax: (011) 23720201  ·  E-mail: letters@bsmail.in
All letters must have a postal address and telephone number

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel