EDITORIAL 

Crony Capitalism : One More “Sweet Heart Deal”

THROUGH these columns, we had, in the past, pointed out glaring irregularities in the disinvestment/privatisation of public sector undertakings during the Vajpayee government. Vajpayee had, in fact, established a separate ministry for disinvestment whose job, by definition, was to sell prime public assets for a song to private/foreign capital. In the process, many acts of commission, omission, sleaze etc surfaced. There were glaring cases like the sale of Centaur Hotel in Juhu, Mumbai where huge sums of money were pocketed by private parties, then close to the ruling dispensation.

Once again a confirmation of this has come, if such a confirmation was ever necessary.  A high-powered committee, including the finance minister, minister for heavy industries and the Comptroller and Auditor General (CAG), has cleared a report prepared by the head of the department of disinvestment within the Ministry of Finance concerning large-scale irregularities in the sale of CMC Ltd.  This is, once again, like the case of Balco and Centaur, an  instance where the sale was undertaken when there was a single bidder.  This, in itself, raises enormous suspicions on the lack of transparency and the potential for underhand dealings. 

The report, however, points out serious infirmities in the figures under various heads which were crucial for determining the price at which the PSU was to be sold. For instance, the report states that, “growth assumption of revenue, which starts at 29 per cent for the year 2002 goes down to 9 per cent by the year 2007. This is despite a capital expenditure of Rs 150 crore during the same period.”

Clearly, this is yet another case of a “sweet heart deal”.  The then disinvestment minister, Arun Shourie, already has many a finger pointing towards such dubious “sweet heart deals”.

The UPA government, while ensuring that all malafide acts committed in the past are corrected and those involved are brought to book, must learn from this experience and detest from embarking on an unbridled course of disinvestment.  The Common Minimum Programme has assured the country and the people that this government will not disinvest any profit-making public sector units. This must be  scrupulously adhered to.

The newly-constituted commission for the reconstruction of public sector undertakings must examine the cases of all unviable public sector undertakings, according priority for the revival of such units. This is an approach that has already been outlined in the Common Minimum Programme. This must also be scrupulously adhered to.