 "Rethinking Disinvestment: Time for a professional touch")
[caption id=“attachment_2474” align=“alignleft” width=“380” caption=“Rethinking the disinvestment strategy. Arko Datta /Reuters”]  [/caption]
When it comes to disinvestment, way too much time is spent on deciding the timing of public offers. Every time India’s public sector companies decide to hit the market, share prices tumble and the government defers the sale process. Maybe its time to transfer government holding in PSUs to a professional wealth fund manager.
Finance minister Pranab Mukherjee has set a target of $10 billion for disinvestment in the budget announced in February. The current incumbent secretary of the Department of Disinvestment, Sumit Bose has a tall task ahead of him. First, you better spruce up your public speaking talent. Addressing international institutional investors around the world is your top responsibility. The mantra is to keep giving hope to the stock market and investors on government share sale once every two months.
At a forum on ‘Disinvestment and the Indian economy,’ organised by India’s High Commission and the Singapore-based Institute of South Asian Studies on Tuesday, Bose said that the Indian government is stepping up A drive (yet again!) to list public sector companies, according to the Business Times newspaper.
The trouble with the disinvestment process is that there is too much time spent on deciding the timing of offers.
Countries like Singapore get professionals to play the role of an active fund manager. However, government ownership of holdings is more of a political issue in India than an economic one. Had that not been the case, it would make perfect sense to transfer the government holding in public sector companies to a sovereign wealth fund. The BSE PSU index is made up of 61 public sector companies. The market cap of these companies is a staggering Rs 20,00,000 crore or $443 billion. The government ownership is half of that value.
An active fund manager would be able to sell shares in the market when the timing is right. The government needs to do rethink it’s “holding strategy” on this one.
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