September 15, 2005

 

Why India needs privatization?

This can be one of the strongest reasons for privatizing the PSUs - including the profit making Navaratnas. Indian Express reports - "Autonomy Aiyar style: pack oil PSUs with Cong men, women." [1]

The Ministry is firing[2] all the independent directors, which includes IIM professors, FICCI Chairman, former bureaucrats from oil PSUs, who were inducted in NDA regime. The proposed list of directors given by Department of Public Enterprises (DPE) has been shown the dustbin. And who all were in this list? Professors, Directors from Ivy League management schools, ex-MD McKinsey, senior bureaucrats!

And who all the Ministry plans to rope in? Former Ministers, AICC Secretary, ex-MPs, Presidents and Secretaries of various state units. All belong to Congress, quite obviously.

What qualifications do these folks possess that they should be the directors of the firms which are valued as follows?


Company Market-Cap (in Rs Crores)
ONGC 1,40,005
IOC 50,200
BPCL 10,788
HPCL 9,920
GAIL 19,712
The National Common Minimum Programme (NCMP)[3] is admirably eloquent about the autonomy of PSUs. (Emphasis mine)
The UPA government is committed to a strong and effective public sector whose social objectives are met by its commercial functioning. But for this, there is need for selectivity and a strategic focus. The UPA is pledged to devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment. Generally profit-making companies will not be privatized.
Hey, but, since when politicians started delivering on their promises?

Predictably, this is not the first time Petroleum Ministry is being used to award the cronies and sycophants. The earlier predecessors Ram Naik [4] and Satish Sharma [5] are still licking their wounds. Little wonder that when it comes to oil PSU privatization, Mani Shankar Aiyar and Ram Naik both share same thought - strong opposition.

As for Mr Aiyar, who has been recently featured in 25 leaders of Asia by BusinessWeek [6], this petty act could have been avoidable.

Now lets see how friends in Left protest and how media follows it up.

Updates:
Indian Express carries an edit[7] and a follow-up[8] story on this today. Cornered with solid evidence, the Ministry is now trying the face-saving exercise. And Left friends have shown token displeasure on this issue.

Since the appointment of Congress cronies violates the guidelines, Govt is planning to change the rewrite the guidelines. In a PTI report[9], Govt plans change guidelines to make politicians and trade union leaders eligible for independent directors. Hmm... Trade union leaders. Do I smell conflict of interest here?

Updates 2:
Express makes a dent! "In an unprecedented decision ...the Department of Public Enterprises (DPE) today rejected the Petroleum Ministry's proposal to foist Congress functionaries as independent directors on boards of all oil navratnas and miniratnas," reports Indian Express [10]

Sucheta Dalal gives details[11] of how every single party takes PSUs for a ride and criticizes the silence (hypocrisy?) of the Left. Didn't we read earlier that trade union leaders may become eligible for independent directors?


References:

[1] Autonomy Aiyar style: Indian Express
[2] Govt plans to sack independent directors : Indian Express
[3] NCMP : The Holy Book everybody swears with
[4] Ram Naik in trouble
[5] So is Mr Sharma
[6] "Pretty good work for a guy who didn't even want the job" : BusinessWeek
[7] Crony Socialism : Editorial from Indian Express
[8] Caught trying to pack oil PSUs with Cong men and women, Petro Ministry now fudges facts : Indian Express
[9] Govt moots appointing politicos on PSU boards : PTI
[10] Govt's own dept spikes Cong list for oil directors : Indian Express
[11] Corporate governance and PSUs : Sucheta Dalal in Indian Express

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