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  #1  
Old August 25th, 2005, 01:15 AM
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Case against privatization via Strategic Sale.

Wrong, Messrs Shourie and Sinha

Prof. TT Ram Mohan.

By ruling out strategic sales or privatisation of profitable public sector undertakings (PSUs), finance minister P Chidambaram has created the right climate for disinvestment to continue. His statement in itself may not suffice to undo the damage caused by the NDA government’s espousal of strategic sales. Nevertheless, by stating that the strategic sale route is deficient in many ways, Chidambaram has restored perspective to the debate on disinvestment.

For the first few years after it was initiated in 1992, disinvestment went off smoothly. Governments were clear that disinvestment was an instrument for public sector reform. This was also the philosophy of the Disinvestment Commission set up by the United Front government in 1996. There would be disinvestment and there would be strategic sales. But in not a single Navratna enterprise did the Commission recommend strategic sale.

The NDA government sought to overturn this philosophy. The objective now was to dismantle the public sector. Strategic sale or privatisation, not disinvestment, would be the norm. Having disposed of a clutch of hotels, Arun Shourie sought to take the axe to the petroleum companies. He failed only because he was pulled up short by the Supreme Court. All that Shourie succeeded in achieving was to discredit the process of disinvestment itself. That is why we are seeing such a fierce backlash now.

The arguments put forward to justify strategic sales are spurious. Strategic sales, it is said, give the government better realisations than disinvestment. Yashwant Sinha contends that price-earnings multiples were higher in the strategic sales route relative to multiples earned when minority stakes were sold. This argument is flawed on several counts:

The initial round of disinvestment did not involve public offers to domestic and international investors. Shares were disinvested by being sold in “bundles” to government-owned financial institutions.

It is inappropriate to compare price-earnings multiples for a company at two different points in time. The comparison must be adjusted for any change in the Sensex multiple over the period.

The two methods are not directly comparable. In strategic sales, a large chunk is sold at one go. In disinvestment, shares are sold in several tranches. The price-earnings multiple in strategic sales must be compared with the average price-earnings multiple over all the tranches, not with the first tranche alone.

Strategic sales are not always efficient in the sense of maximising the seller’s revenues. They are efficient only when a number of conditions are satisfied, a key condition being that there is a large number of bidders.

Yet, Shourie pushed or tried to push strategic sales through even when there was only one bidder. Shourie says the process was “transparent”. May be, but because a process is transparent, it does not follow it is efficient: the process can be transparently inefficient.

In general, strategic sales will give better realisations only on the assumption that there will be no improvement in firm performance over time under government ownership. Advocates of strategic sale in India have argued this is indeed true. Yet, the world over, it is disinvestment, not strategic sale, that has been the preferred mode of sale and it has been accompanied by improvement in performance.

In India, listed PSUs have shown significant improvement in performance consequent to disinvestment. In the period 1997-2005, the market capitalisation of 25 listed PSUs virtually doubled. In the ’90s, those who favoured strategic sale were telling the government, “Please get rid of your equity while the going is good, otherwise you will lose value”. Had the government done so, there is no way it would have obtained a premium that reflected the appreciation that has taken place.

There are many reasons why disinvestment works. Once a PSU is listed and there is an observable share price that reflects performance, management tends to focus better on commercial objectives. The fact that there are retail and institutional shareholders out there, whose interests cannot be disregarded, gives listed PSUs a measure of protection from unhealthy government interference. The presence of independent directors also contributes towards commercial orientation and autonomy.

Critics of the government say that in turning its back on strategic sale, the UPA government is giving in to the Left’s ideological attachment to the public sector. They are wrong. It is their preference for strategic sale over disinvestment that is ideological in nature.

(The author is a professor at IIM, Ahmedabad)

Original article
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Old August 25th, 2005, 01:19 AM
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Re: Case against privatization via Strategic Sale.

Sometime back our resident economoron aka viking and his hanger on miss aruna, had commented about disinvestment being stopped totally.

It is amply clear that the two dont understand a crap about disinvestment, strategic sale or any other economic terminologies.

I had pointed out that what the BJP govt. had indulged in, cost the exchequer quite a large sum of money. Here is an article by a learned prof. which vindicates my point.

However I am sure the master buffoon will try to debunk and discredit this prof. The fact is he is not fit enough to clean the boots of this learned man. The only way he can get into IIM Ahmedabad is using his professional knowledge that of a Jamaadar
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Old August 25th, 2005, 01:39 AM
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Talking Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by aby_baby
Sometime back our resident economoron aka viking and his hanger on miss aruna, had commented about disinvestment being stopped totally.

It is amply clear that the two dont understand a crap about disinvestment, strategic sale or any other economic terminologies.

I had pointed out that what the BJP govt. had indulged in, cost the exchequer quite a large sum of money. Here is an article by a learned prof. which vindicates my point.

However I am sure the master buffoon will try to debunk and discredit this prof. The fact is he is not fit enough to clean the boots of this learned man. The only way he can get into IIM Ahmedabad is using his professional knowledge that of a Jamaadar
Phantom Shitter,

Can you pls. explain why they had decided to sell BHEL initially and backed out after getting flogged by the Left?

Take your time I know this is the time you generally play with shit. Maybe you could ask Indian who does not know difference between server side code
and client side code.
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Old August 25th, 2005, 01:49 AM
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Re: Case against privatization via Strategic Sale.

Jealous of IIMs. Dont worry I will personally recommend you for the post of janitor there

The commies had objection to BHEL sale for many reasons. The govt. had to give in temporarily. Have to accomodate all ideological viewpoints (no different from Mamtas of erstwhile regime). It has been stalled not stopped. As a janitor you wont understand the diff

Ever wonder till now you have never been able to defend the BJP when called upon . what is your case for sale as perfected by BJP and which comes out in the case of Batra Hospitality and Juhu Centaur?

Oops I forgot, you are a toilet cleaner by training and profession and don't know a shit about this topic.
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Old August 25th, 2005, 01:55 AM
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Question Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by aby_baby
(no different from Mamtas of erstwhile regime
What economic issues did Mamata oppose?
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Old August 25th, 2005, 02:03 AM
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Question Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by aby_baby
The govt. had to give in temporarily. Have to accomodate all ideological viewpoints
Apparently the Left is supporting Moan Mohan Singh.Your comments?

Quote:
PM's role model tag on Buddhadeb
OUR BUREAU

PM praises...
New Delhi, Aug. 24: If Buddhadeb Bhattacharjee said yesterday he supported what Manmohan Singh was trying to do in Delhi, it was the Prime Minister’s turn today to return the compliment.

“Every chief minister should learn from Buddhadeb’s role model,” Singh told Parliament amid enthusiastic thumping of desks.

The glee in Congress ranks was the most palpable because they thought the Prime Minister, an economist by training, had made a clever political turn by exploiting an apparent contradiction in the CPM.

Travelling in Singapore yesterday, Bhattacharjee had said he favoured “100 per cent privatisation”, presumably including foreign investment, of new ports and airports.

It seemed his statement was in conflict with the party’s position, which is not comfortable with fully private owned ports and airports.

Of late, however, it appears to have come round to the view that though existing ports and airports cannot be privatised, new projects can come up with private investment.

There was little obvious reason for the Prime Minister to comment on Bhattacharjee’s trip since he was speaking in the Rajya Sabha on the employment guarantee bill.

Yet, he chose to digress. “He is doing what we should all be doing,” Singh said, referring to Bhattacharjee’s efforts to attract foreign investment.

CPM politburo members Sitaram Yechury and Brinda Karat were in the House when Singh made his comments. In Delhi, the CPM has been opposing nearly every reform measure.

On the contrary, Bhattacharjee said: “Our Prime Minister is working very hard to take India forward and he has a vision for it.”

A prime ministerial aide said Singh had read today The Telegraph report on Bhattacharjee’s statements.

If Singh caused consternation in the CPM, other Left parties were vocal. “We are opposed to giving foreign investors control over such sensitive areas as airports and telecom. The CPM must resolve its own contradictions,” said Abani Roy of the RSP.
Why is Kangress complaining if the Left is supportive?
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Old August 25th, 2005, 02:08 AM
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Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by viking
What economic issues did Mamata oppose?
Every single petro price hike. I wonder why the BJP wallahs have such a short memory span. Have they forgotten her tantrums, reduce the price or I withdraw support ultimatums. No wonder the first few budgets of Yashwant sinha had more rollbacks than proposals

What about her opposition to privatization of PSUs, especially the ones in Bengal, mainly Jessop (if my memory serves me right)

BTW I am still waiting for your defense of BJP espoused privatization via strategic sale. Not that I expect you to know anything about that
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Old August 25th, 2005, 02:20 AM
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Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by viking
Apparently the Left is supporting Moan Mohan Singh.Your comments?

Why is Kangress complaining if the Left is supportive?
Come on man are you so blind. Buddhadev rules WB, while his party shares power in center, they arent controlled by Buddhadeb.

Commies are surely following double standards while dealing with WB and rest of the country.

Contrary to popular beliefs Buddhadeb seems to be doing extremely well in WB. Calcutta and Delhi are probably the only two states where quality of life seems to be getting better (well they couldnt have gotten any bad especially in Calcutta) Not to mention the hoardes of IT companies attracted to WB because of sops being doled out.

If only his party followed the same policy in center

On a similar note which might hearten you, in Gujarat, Narendra Modi seems to be doing an outstanding job. As a part of a pilot project we measured some economic indicators and Gujarat came to top. It is one of the very few states where corruption or perception of corruption seems to have gone down. Maybe this is the reason why the MLAs are rebelling against him, as Modi seems to have plugged many money making opportunities for his men.
If only he could dilute his ideology of spewing hate
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Old August 25th, 2005, 02:39 AM
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Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by aby_baby
On a similar note which might hearten you, in Gujarat, Narendra Modi seems to be doing an outstanding job. As a part of a pilot project we measured some economic indicators and Gujarat came to top. It is one of the very few states where corruption or perception of corruption seems to have gone down. Maybe this is the reason why the MLAs are rebelling against him, as Modi seems to have plugged many money making opportunities for his men.
At least this makes me hopeful that you can even talk sense.

By the way if the WB CM is not opposed by his party why should Manmohan be afraid of the Left? I think this is where political skills count. Manmohan has none. He should resign and pave way for a BJP govt.
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Old August 25th, 2005, 02:50 AM
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Question Double standards by Manmohan Singh?

How is Manmohan Singh not pressurised into acting on this issue if he can be pressurised by the Left on economic issues?

CPI demands removal of Buta Singh
NDTV Correspondent

Thursday, August 25, 2005 (Patna):

The CPI, part of the Left front, has joined the NDA's sack the Bihar governor chorus, calling Buta Singh a tool in the hands of political parties.

"The governor should be removed. Our opinion is that under his rule the law and order is collapsing," said Gurudas Dasgupta, MP, CPI.

Figures


The CPI has used figures provided by the Ministry of Home affairs to accuse Buta Singh of failing to maintain law and order in the state.

Presidents rule was imposed in Bihar in March 2005. Since then according to the home ministry there have been 1045 kidnappings, 1521 murders and 525 dacoities.

Good news

This is good news for the opposition NDA.

The CPI is part of the UPA left combine at the Centre and its criticism of Buta Singh strengthens the point the NDA has been making.

The discomfort within the Bihar Congress is visible. In trying to defend Buta Singh's rule in Bihar they are ending up criticising RJD.

"There is no deterioration in law and order. The only change is that compared to earlier, more cases are being registered by the police," said Nikhil Kumar, MP, Congress.

But the CPI's attack on Buta Singh has roots in the emerging coalitions for coming assembly elections. The CPI is not the part of the CPM-Congress-RJD combine.

But the failure to replicate the central coalition in Bihar is a matter of concern for the other left parties and UPA, as it will lead to division of secular votes.

http://www.ndtv.com/morenews/showmor...Singh&id=77879
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Old August 25th, 2005, 02:50 AM
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Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by viking
At least this makes me hopeful that you can even talk sense.

By the way if the WB CM is not opposed by his party why should Manmohan be afraid of the Left? I think this is where political skills count. Manmohan has none.
You will never understand the logic here . Buddhadeb was elected by WB. His party dare not oppose him. Not the case at the center, where Yechuri and Karat gang can get their party to oppose anything good that comes out of the Sardar's mind. They have nothing to lose (hardly ever won an election in their lifetime)

Quote:
He should resign and pave way for a BJP govt.
Dream on The direction BJP is headed at this moment, there wont be a party left by the time of next general elections Last I heard Khurana was kicked out. Looks like party is happily in self-destruct mode. Never knew a dead Jinnah could cause so much trouble. It seems Vajpayee also has joined his fan club
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Old August 25th, 2005, 02:55 AM
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Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by aby_baby
The direction BJP is headed at this moment, there wont be a party left by the time of next general elections Last I heard Khurana was kicked out. Looks like party is happily in self-destruct mode. Never knew a dead Jinnah could cause so much trouble. It seems Vajpayee also has joined his fan club
BJP needs a shake up lot of old shit like Khurana have to be thrown out. Even Advani, Vajpayee etc should now retire. Let there be a battle amongst the best for the top slot. Arun Jaitly,Pramod Mahajan or Shushma Swaraj could be the likely winners.

This time that the UPA fights amongst itself the BJP too can fight amongst itself. This will ris the party of the excess fat before the next election.

I honestly feel the BJP can only go up from where it is now.

BTW

You said that BJP rolled back prioces each time Mamta went on offensive then in that case why does the UPA not roll back price of fuel each time Left goes on offensive?
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Old August 25th, 2005, 03:10 AM
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Re: Case against privatization via Strategic Sale.

Quote:
Originally Posted by viking
You said that BJP rolled back prioces each time Mamta went on offensive then in that case why does the UPA not roll back price of fuel each time Left goes on offensive?
Well you answered the question why Sardar is better than BJP Govt . He can call the bluff when needed . Left did come out with public protests last time fuel prices were raised. Prices had to go up and they remained there.

Unlike Vajpayee who had to cajole didi out of her sulk everytime .
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