Make privatisation tick cut goi cholesterol

Make privatisation tick cut goi cholesterol

GoI is facing a rough patch in reducing its role in business. Private investors are lukewarm to its disinvestment plans and some of the interest being shown is of suspect provenance. Since the beginning of this year, the government has sold Air India to the Tatas after writing off most of the airline's accumulated debt and losses. It had to reduce the size of Life Insurance Corporation's (LIC) initial public offering (IPO) as portfolio investors became skittish in a volatile financial market. It has called off the sale of Bharat Petroleum Corporation Ltd (BPCL NSE -0.36 %) after failing to find a strategic investor. It is reviving sales of Central Electronics Ltd and Pawan Hans Ltd with new rules in place seeking bona fides after questions arose over the financial probity of bidders.

GoI is pushing ahead with the sale of its residual stake in Hindustan Zinc NSE -1.99 %, which could make a sizeable contribution to this year's disinvestment target after the lower-than-expected proceeds from the LIC listing. It also intends to put Shipping Corporation of India NSE -2.85 % (SCI) on the block despite delays over hiving off its non-core assets. The LIC IPO, originally scheduled for 2021-22, set back the divestment proceeds for the year. This led to the government missing even its revised disinvestment target of ₹78,000 crore, a pale shadow of the original ambition of raising ₹1.75 lakh crore. Disinvestment receipts have missed reduced revised estimates in two of the four preceding years, and this year's budget estimate is a more prudent ₹65,000 crore.

The difficulties in accomplishing strategic sales is a matter of concern. This route should ideally be more acceptable to buyers who might be wary of boarding state-run enterprises as minority shareholders. LIC's stock price has been trending down since listing in an indication of the market's perception of government influence in managerial decision-making. It is vital that the privatisation pipeline finds viable takers. Lowering disinvestment ambitions not only affects government finances but it also blunts competition in the economy.