Disinvestment is more a slogan than an article of faith for the UPA government. For the fourth consecutive year, the government has failed to achieve its disinvestment target. For the current financial year, which will end in a couple of weeks, it has slashed the target from `40,000 crore to `16,027 crore. Till the end of February, the actual achievement was a paltry `5,094 crore. During the previous three years also, the performance was more or less on the same pattern. It is obvious that the government’s only aim was to balance the fiscal level in its Budget estimates. This is borne out by the manner in which the government managed to raise revenue from the sale of its shares in the Indian Oil Corporation (IOC).
On its part, the petroleum ministry was reluctant to sell its shares in the IOC at the current subdued market rates but the finance ministry put enormous pressure on it to disinvest. The stratagem it found was to force the Oil and Natural Gas Commission and the Oil India Limited to enter into an off-market deal whereby they picked up 5 per cent IOC shares each for Rs 5,340 crore. By no stretch of the imagination can such a transaction be described as disinvestment but that is precisely what the government has done. In other words, it has indulged in financial jugglery in the name of disinvestment. As mentioned, the aim is to make the fiscal deficit look more agreeable.
The idea of disinvestment is not merely to raise resources for the government. It is to let government-owned companies to function more responsibly. In the corporate world, companies which do not function properly, i.e., do not make adequate profits, have only one option, which is to close down. But in the public sector they remain as white elephants causing enormous drain on the exchequer. Disinvestment, therefore, means a revamp of the whole public sector. Alas, the government does not have any such vision. It also does not want to lose its grip on these white elephants for its own selfish ends.