LALU MAGIC for Valentine Day Special
Troubled Galaxy Destroyed Dreams: Chapter 16I
Times of India -
BHUBANESWAR: Within hours of railway minister Lalu Prasad gloating over his safety record during his budget speech in Parliament, one of the country's flagship expresses derailed from its tracks on Friday, leaving at least 10 passengers dead and about ...
3 dead, 50 injured as Coromandel Express derails in Orissa
Breaking News: Train derails in Orissa, 3 killed, 70 hurt
 Business Standard | The lighter side of Lalu Rediff, India - Just like every other year Lalu was at his humourous best while presenting the interim Railway Budget in the Lok Sabha on Friday, with a fair sprinkling of ... Rail budget eyes polls, say BJP, Samajwadi Party (Lead) |
Poll panel row, recession blues to occupy last session of Lok Sabha Hindu, India - The interim railway budget and vote on account on the general budget will also be passed. Some fireworks are also likely with the ruling Congress-led United ... |
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In India for almost four decades the country was pursuing a path of development in which public sector was expected to be the engine of growth. However, the public sector had overgrown itself and their shortcomings started manifesting in the shape of low capacity utilization and low efficiency due to over manning and poor work ethics, over capitalisation due to substantial time and cost overruns, inability to innovate, take quick and timely decisions, large interference in decision making process etc.
The Government started to deregulate the areas of its operation and subsequently, the disinvestment in Public Sector Enterprises was announced. The process of deregulation was aimed at enlarging competition and allowing new firms to enter the markets. The market was thus opened up to domestic entrepreneurs / industrialists and norms for entry of foreign capital were liberalised.
Prior to 1991, a large number of industries were reserved for the public sector:
4.1.1 Industries reserved for PSUs prior to July 1991
1. Arms and Ammunition and allied items of defence equipment.
2. Atomic energy.
3. Iron and steel.
4. Heavy castings and forgings of iron and steel.
5. Heavy plant and machinery required for iron and steel production, for mining, for machine tool manufacture and such other industries as may be specified by the Central Government.
6. Heavy electrical plant including large hydraulic and steam turbines.
7. Coal and lignite.
8. Minerals oils.
9. Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond.
10. Mining and processing copper, lead, zinc, tin molybdenum and wolfram.
11. Minerals specified in the Schedule to the Atomic Energy (Control of Production and Use) Order 1953.
12. Aircraft.
13. Air transport.
14. Rail transport.
15. Ship building.
16. Telephones and telephone cables, telegraph and wireless apparatus (excluding radio receiving sets).
17. Generation and distribution of electricity.
Through Notification No. 477(E) dated 25.7.1991, the industries reserved for PSUs were reduced to eight areas from the previous list of seventeen.
4.1.2 Industries reserved for PSUs since July 1991:
1. Arms and Ammunition and allied items of defence equipment, defence aircraft and warship.
2. Atomic Energy.
3. Coal and Lignite.
4. Mineral Oils.
5. Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond.
6. Mining of copper, lead, zinc, tin, molybdenum and wolfram.
7. Minerals specified in the schedule to Atomic Energy (Control of production and use) Order, 1953.
8. Railway Transport.
This list by December 2002 includes only three areas reserved for PSUs:
1. Atomic Energy.
2. Minerals specified in schedule to atomic Energy (Control of Production and Use) Order, 1953.
3. Railway Transport.
Because of the current revenue expenditure on items such as interest payments, wages and salaries of Government employees and subsidies, the Government is left with hardly any surplus for capital expenditure on social and physical infrastructure. While the Government would like to spend on basic education, primary health and family welfare, large amount of resources are blocked in several non-strategic sectors such as hotels, trading companies, consultancy companies, textile companies, chemical and pharmaceuticals companies, consumer goods companies etc. Not only this - the continued existence of the PSEs is forcing the Government to commit further resources for the sustenance of many non-viable PSEs. The Government continues to expose the taxpayers' money to risk, which it can readily avoid. To top it all, there is a huge amount of debt overhang, which needs to be serviced and reduced before money is available to invest in infrastructure. All this makes disinvestment of the Government stake in the PSEs absolutely imperative.
4.2 Primary objectives for privatising the PSEs
The primary objectives for privatising the PSEs are, therefore, as follows:
· Releasing large amount of public resources locked up in non-strategic PSEs, for redeployment in areas that are much higher on the social priority, such as, basic health, family welfare, primary education and social and essential infrastructure;
· Stemming further outflow of scarce public resources for sustaining the unviable non-strategic PSEs;
· Reducing the public debt that is threatening to assume unmanageable proportions;
· Transferring the commercial risk, to which the taxpayers’ money locked up in the public sector is exposed, to the private sector wherever the private sector is willing and able to step in - the money that is deployed in the PSEs is really the public money and is exposed to an entirely avoidable and needless risk, in most cases;
· Releasing other tangible and intangible resources, such as, large manpower currently locked up in managing the PSEs, and their time and energy, for redeployment in high priority social sectors that are short of such resources.
4.3 Other benefits expected from privatisation
The other benefits expected to be derived from privatisation are:
· Disinvestment would expose the privatised companies to market discipline, thereby forcing them to become more efficient and survive or cease on their own financial and economic strength. They would be able to respond to the market forces much faster and cater to their business needs in a more professional manner. It would also facilitate in freeing such companies from Government control and introduce corporate governance in the privatised companies.
· Disinvestment should result in wider distribution of wealth through offering of shares of privatised companies to small investors and employees.
· Disinvestment would have a beneficial effect on the capital market; the increase in floating stock would give the market more depth and liquidity, give investors easier exit options, help in establishing more accurate benchmarks for valuation and pricing, and facilitate raising of funds by the privatised companies for their projects or expansion, in future.
· Opening up the public sector to appropriate private investment would increase economic activity and have an overall beneficial effect on the economy, employment and tax revenues in the medium to long term.
· In many areas, e.g., the telecom and civil aviation sector, the end of public sector monopoly and privatisation has brought to consumers greater satisfaction by way of more choices, as well as cheaper and better quality of products and services.
· With the quantitative restrictions removed and tariff levels revised owing to opening of world markets/WTO agreements, domestic industry has to compete with cheaper imported goods. In the bargain, the common man now has access to a whole range of cheap and quality goods. This would require Indian industries to become more competitive and such restructuring would be easier in a privatised environment.
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Last year's multi-billion dollar deal has got bogged down by issues such as accident liability protection for US companies which have lobbied hard for a slice of India's lucrative nuclear market.
Former US President George Bush signed the agreement with Prime Minister Manmohan Singh in the face of domestic critics who said it violated the nuclear Non-Proliferation Treaty (NPT).
Plummeting economic growth rates will push millions of more people in the developing countries into poverty and also retard progress in reducing infant mortality!
The Marxist have adopted the WORLD BANK IMF Rhetoric very scientifically!
Kolakta and West Bengal have not gained much barring some OLD LIQUID in New Bottles. Lalu has taken care of the VOTE ORIENTED SENSITIVE Zones Maharashtra, Kashmir, Tripura to UTTAR PRADESH, DELHI and BIHAR tagged with JHARKHAND!
The TOILET TRY Engaged Media has been COLORED PINK wearing only PINK CHADDI! The Chaddi has become quite a BLACK HOLE to get the citizens into it already deprived of Whatsoever EMPOWERMENT and STUNG with Mind control and Brain washing In IT FDI EXPLOSION XXXXX!
CELEBRATE FUCKING CULTURE has taken over INDIAN South ASIAN GEOPOLITICS! RESISTANCE is limited in VALENTINE RIGHTS Movement justifying DE INDUSTRIALISATION and DEATH HAWKING! Businessman Moninder Singh Pandher and his servant Surinder Koli were sentenced to death by a special court on Friday for rape and murder of a 14-year-old girl Rimpa Halder, one of 19 victims in the sensational Nithari serial killings. What about the Rapists engaged in GANG RAPE in every corner of the country? What about the Marketing of OPEN XXXXX SEX as the ADULT SHOW on Indian Television is going to be cleared by the FTV MINISTRY ruling India for the Promotion of GANG RAPE CULTURE adding the recipe of CELEBRITY STATUS Live! What about the INFINITE ENSLAVEMENT predestined? The Woman LIBERATION is to be the MOBILISATION into COMMODITY MARKET and DURABLE NON DURABLE CONSUMER GOODS, fashion, ramp and Vogue?
The head of this extreme-right group, Muthalik had threatened to marry off young girls found in the company of boys on Valentine's Day. Earlier in the day a strong demand was made in the Rajya Sabha to proscribe organisations like the Sri Ram Sene, which have been indulging in moral policing in Karnataka and threatened to disrupt the Valentine's Day celebrations on Saturday.
My home state UTTARANCHAL never had to political Muscle neither it may boast of Power or money Base. WE have to cry for CONNECTIVITY for our TOURISM based economy all the time. Only train we have from Howrah to Kathgodam, the BAGH Express takes THIRTY SIX Hours.
The HOUSE Wives do tend now their Home Budget management in the Strategic market, I am afraid of. Meanwhile,The Sri Ram Sene has said its cadres will maintain a constant vigil in New Delhi to check that 'love birds' did not indulge in obscene behaviour on Valentine's Day even as Delhi Police has made elaborate security arrangements to avoid any eventuality on the occasion.
"Banners will be put up at several places in the capital. We have ten mobile teams ready to roam around the city and check that love birds are not involved in obscene ways," informed Sri Rama Sene general secretary Vinay Kumar. Kumar said India is the land of Lord Krishna and nobody should compete with him in terms of love and relationship. He said his party has also set up a helpline number – 9891616259 – where women can complain about any harassment.
There is a separate campaign to ‘Walk to the nearest pub and buy a drink and raise a toast’, that has found supporters from Toronto to Bangkok to Sydney, with even teetotallers saying they will get a drink on Saturday to show solidarity.
Presenting the vote-on-account for expenses in the first four months of next fiscal, he also announced reduction in the fares of ordinary passenger trains by Rs one for fares costing up to Rs 50 for journey above 10 km.
"Around 0230 hours, motorcycle-borne miscreants threw the bottles filled with kerosene and fled from the scene. The security men at the residence 'Mannat' chased the miscreants but in vain," said Deputy Commissioner of Police (DCP) Niket Kaushik.
Even as its industrial customers face a crippling slowdown, the Railways expects to earn gross traffic receipts of Rs 93,159 crore in 2009-10, exceeding the revised estimates for the current fiscal by Rs 10,766 crore. Passenger fares for second class (above Rs 50) as also for the luxury trains have been reduced by two per cent.
The pace of expansion is affected by the global downturn impacting the Indian business, but the balance-sheet of the country's largest transporter remains robust.
Expenses (operating ratio) would a tad higher at 89.9 per cent because of increased salary bill after implementation of the Sixth Pay Commission in the next financial year as compared to 88 per cent in the current fiscal.
As the rest of the economy is grappling with business setbacks, the Railways would pay a higher dividend of Rs 5304 crore to its owners -- the government.
" ...Railways have kept the human aspect as the central focus and achieved an extraordinary feat without puttany extra burden on the common man or the employees," Railway Minister Lalu Prasad said while presenting the interim Budget in Parliament today.
| Friday, February 29, 2008 (23:03:05) Govt proposes to mop up Rs 10,165 crore from disinvestment
New Delhi: In line with its decision to list more public sector undertakings, government today proposed to mop up Rs 10,165 crore by selling its stake in profit-making public sector enterprises in 2008-09. For the next fiscal, the government has projected receipt of Rs 1,165 crore through divestment of a small portion of equity in companies including NHPC. Besides, Rs 9,000 crore is budgeted as receipts from the SUTI (Specified Undertaking of the Unit Trust of India-I), a subsidiary of UTI, in the next fiscal.The disinvestment proceeds would be transferred to National Investment Fund (NIF), the Receipt Budget tabled by Finance Minister P Chidambaram in Parliament said. "It is the policy of the government to list more CPSEs in order to unlock their true value and improve corporate governance," Chidambaram said in Parliament.This fiscal, the government had transferred Rs 1,651 crore to NIF, which was set up to use the return from investment of disinvestment proceeds for social sector projects and partly to meet capital needs of profitable PSUs. In 2007-08, the government received Rs 36,125 crore from disinvestment proceeds comprising Rs 34,308.60 crore as one time transfer by RBI for stake in State Bank of India.Pointing out that 44 CPSEs have been listed, Chidambaram said the government will provide Rs 16,436 crore as equity support and Rs 3,003 crore as loans to the Central Public Sector Enterprises. The Economic Survey tabled in the Parliament yesterday has also asked the government to list all unlisted public sector enterprises and sell a minimum 10 per cent equity to the public. (PTI) | ||
| http://www.headlinesindia.com/budget/index.jsp?news_code=71623 |
Following are the highlights of the Interim Railway Budget for 2009-2010:
HIGHLIGHTS OF INTERIM RAILWAY BUDGET
* Lalu Prasad presents UPA's last rail budget in its term
* Railways made Rs 90,000 cr profit
* 2 pct cut in all AC and mail train fares
* Rs 10,500 cr allocated for pension requirements
* 6th Pay Commission to hike expense by Rs 13,500 cr
* Rlys laid 1100 kms of new rail lines
* Bhubaneshwar-New Delhi Rajdhani becomes 4 days a week
* New Delhi-Ahmedabad Rajdhani becomes daily
* Steep fall in container traffic
* Work on Delhi-Mumbai freight corridor started
* Rlys to invest Rs 35,900 cr in 2009
* Railway connectivity to Kashmir initiated
* Passenger growth up 14 pct
* Research on for bullet trains
* FY10 operating ratio seen at 88%
* Mumbai-Bikaner super-fast bi-weekly
* Nizamuddin-Bangalore Rajdhani tri-weekly
* Passenger trains to have 22 pct more capacity
* Efficiency of passenger and goods wagons to be hiked
* Goods trains to have 78 pct added capacity
* 4 Railways inquiry call centres set up
* Electrification of 1000 km of rail lines completed
* Wagon production to be hiked from 6600 to 15000
* Railways invested Rs 70,000 cr out of surplus
* Railways to invest Rs 2,30,000 cr in 11th plan
* Railways reported Rs 25,000 cr cash surplus last year
* Revenues have risen by 39 paise a tonne/km since 2001
* Costs have fallen by 7 paise a tonne/km since 2001
* Gaps in the network will be bridged: Lalu
* Railways got loans at 4 pct
* Accidents come down from 325 in 03-04 to 194 in 07-08
* Railways has grown freight at the rate of 8 pct over last 5 yrs
Highlights of Interim Railway Budget, 2009-10
* Lalu presents interim Railway budget
* This is UPA's last rail budget in its term
* Railways has a Rs 90,000 cr profit
* Rs 10,500 cr allocated for pension requirements
* 6th Pay Commission to hike expense by Rs 13,500 cr
* Steep fall in container traffic
* Work on Delhi-Mumbai freight corridor started
* Rlys to invest Rs 35,900 cr in 2009
* Railway connectivity to Kashmir initiated
* Passenger growth up 14 pct
* Passenger trains to have 22 pct more capacity
* Efficiency of passenger and goods wagons to be hiked
* Goods trains to have 78 pct added capacity
* 4 Railways inquiry call centres set up
* Electrification of 1000 km of rail lines completed
* Wagon production to be hiked from 6600 to 15000
* Railways invested Rs 70,000 cr out of surplus
* Railways to invest Rs 2,30,000 cr in 11th plan
* Railways reported Rs 25,000 cr cash surplus last year
* Revenues have risen by 39 paise a tonne/km since 2001
* Costs have fallen by 7 paise a tonne/km since 2001
* Gaps in the network will be bridged: Lalu
* Railways got loans at 4 pct
* Accidents come down from 325 in 03-04 to 194 in 07-08
* Railways has grown freight at the rate of 8 pct over last 5 yrs
* Research on for bullet trains
* FY10 operating ratio seen at 88%
* Mumbai-Bikaner superfast bi-weekly
* Nizamuddin-Bangalore Rajdhani tri-weekly
* Lalu gives 2 pct cut in AC and mail train fares
* Forty-three new trains announced
* Laid 1100 kms of new rail lines
* Bhubaneshwar-New Delhi Rajdhani becomes 4 days a week
* New Delhi-Ahmedabad Rajdhani becomes daily
DISINVESTMENT OF RITES AND IRCON
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LOK SABHA
The Ministry of Railways is not in favour of disinvestments in Rail India Technical and Economic Services (RITES) and Indian Railway Construction Corporation (IRCON International Ltd.)
RITES is a consultancy organization under the Ministry of Railways which carried out studies as required by the Indian Railways, clients railways abroad and other sectors. RITES also is in the business of export of rolling stock and inspection of materials procured by the Railways. IRCON is in the field of construction of railway projects which are of specialized nature. The Ministry is not is favour of disinvestments of RITES and IRCON International Ltd., for the following reasons:
IRCON and RITES being construction and consultancy organizations can keep only a small work force on permanent basis. In the existing scenario of stiff competition in the construction industry. Both in domestic and international market, only companies which are lean with respect to their fixed cadre can sustain their profits. Presently the skills for undertaking rail related consultancies are acquired by RITES through personnel on deputation from railways. After disinvestments it will not be possible to induct railwaymen into RITES. It will affect the competence of the organization to carry out rail related consultancy in India and abroad.
Activities of RITES/IRCON abroad an opportunity to railway personnel to observe developments which benefit the railway officers on repatriation.
Indian Railways have got surplus manufacturing capacity in production units for manufacture of locomotives and coaches. RITES and IRCON are the export arms of Indian Railways for export of locomotives, coaches etc. For export of locomotives and coaches, a close coordination between Railway Research, Design and Standard Organization, Indian Railway manufacturing units and RITES is required. The railway rolling stock requirement varies from country to country and considerable design inputs and manufacturing effort is required in most cases, e.g. the Indian Railways in association with RITES and IRCON have developed locomotive suitable for ‘Cape Gauge’ which is prevalent in some African countries and Southeast Asian countries.
RITES also carries out independent third party acceptance testing for components procured by the Indian Railways. If RITES were to be disinvested, Indian Railways would have to create a new organization for this.
Many of the projects undertaken abroad for construction and for operation of railway system are given to the PSUs on the strength of Indian Railways backing, e.g. the Letter of Intent given by the Malaysian Government for construction of US$ 1.5 billion Ipoh-Padang Besar doubling project on single tender without going through the process of formal tendering is only on the strength of the backing of Ministry of Railways, Government of India. Similarly, the contracts for operation management of Railway System in Colombia and Zambia have been secured by RITES based on the Railway operating experience of Indian Railways.
Disinvestments of IRCON International Ltd., is under examination by Disinvestment Commission, who have yet to make their recommendations. For Disinvestment in RITES, Commission has recommended that:
A minimum of 51% of the Government equity may be given to employees (both present and past) of RITES. Government may retain 25% of the equity. Balance equity may be distributed among reputed infrastructure consultancy organization and infrastructure leasing and financing organizations after suitable pre-qualification;
The Railways should have an agreement with RITES under which continuous induction of talented railway personnel would be guaranteed for a period of 5 years.
In addition, the Disinvestments Commission has also suggested:
The Railways should develop consultancy expertise outside railway area with a view to increase non-railway consultancy business.
Export of rolling stock handled by the RITES can be handled directly by the Railways.
Inspection work related to quality assurance of purchased items presently entrusted to RITES may be handled by the Ministry of Railways.
Ministry of Railways have not agreed to the recommendations and suggestions of Disinvestments Commission for disinvestments of RITES as listed above for the following reasons:
The present net worth of RITES is Rs.158 crores and the share capital is Rs.2 crores. For sale of 51% of shares to employees, the Government should be able to realize 51% of the net worth i.e. Rs.80 crores approximately. Thus the hundred rupee share would have to be sold for approximately Rs.7800/-. Also the expected annual dividend of Rs. 3 crores, would yield an average return of only 1.9% to the employees. To realize Rs.80 crores through employees as recommended by Disinvestments Commission, on the average investment of the present employees of the RITES would be in the range of Rs.3.5 lakhs per employee if all the present employees opt for it. This may not be possible.
Deputation of railway personnel to RITES, after disinvestments, would not be possible.
Disinvestment Commission’s suggestion that RITES may develop expertise in non-railway business, after disinvestments, would defeat the very purpose for which RITES was initially set up. Indian Railways requirement of consultancy expertise in railway area would get diluted and may not be available after sometime as availability of railway expertise in RITES dwindles.
The export of rolling stock was delegated to RITES only because Indian Railways was unable to handle it directly through government departmental setup. The recommendation if accepted would immediately affect export of Railway rolling stock and Indian Railways efforts to utilize spare capacity available in workshops.
The work of quality assurance for purchase items was hived off as a non-core activity to RITES as an independent third party. If Ministry of Railways were to carry out inspection work, they would need to create an organization for the same at a time when Indian Railways are making every efforts to contain growth of manpower.
This information was given by Shri Nitish Kumar Minister for Railways in a written reply to a question by Shri Subodh Mohite in the Lok Sabha today.
R. C. Acharya
THE disinvestment exercise — politically the correct word for privatisation — is at a crucial stage, pulled in various directions by political and business interests. At stake is the fiefdom of public sector units.
But, looking at the disinvestment exercise dispassionately, it is actually a blessing in disguise. For, if nothing else it will certainly end politicians enjoying free lunches at the cost of the consumer and the tax-payer.
Economic Theory of Politics is a well-known model that assumes that voters are `utility' maximisers and political parties `vote' maximisers. While the individual voter will favour a political party which he considers, or perceives, will provide him with the highest utility (welfare) from government activity, a political party will aim to formulate policies to achieve these goals.
Unfortunately, this conflicts with the social welfare maximising model of government behaviour under which the politicians are supposed to seek office to push through policies for social good. Declining levels of political integrity over the last couple of decades have resulted in widespread abuse of political power for achieving narrow gains and securing personal vote banks. Over the years, unfortunately, the PSUs have become unwilling tools for some unbridled pork barrel politics in the grubby hands of politicians.
The Unit Trust of India is still struggling to get out of the huge losses it suffered on account of unwise investments it made reportedly at the behest of the Finance Ministry. Now, the petrol pump scam has brought into open the blatant favouritism indulged in by the political class, in general. Free lunches enjoyed at Hotel Ashoka and other ITDC units are a legend and recently the Minister for Railways chose to ignore expert advice by announcing the creation of seven new zones. Ostensibly to improve administrative capability of the 1.7-million behemoth, the apparent objective is creation of more job opportunities in the beneficiary States, adding to the already bloated work force and adversely effect the Railway's operational efficiency.
It was the indomitable Lady Margaret Thacher who, as Prime Minister, pursued for 11 long years the privatisation of Britain's nationalised industries with a single-minded determination borne out of the conviction that government had no business to be in business. Since then former citadels of Socialism have embraced the new mantra, broken up state monopolies selling them to private parties choosing to let market forces determine their future course. In the satellite states of the former USSR, the Eastern Bloc countries, Zambia, Vietnam, and China, private enterprise is no longer a dirty word!
What exactly does privatisation involve, and what are the mechanics of achieving the ultimate goal, noble or otherwise? In the UK it involved transfer of public sector resources to the private sector, some of the most publicised sales being of British Telecom, British Gas, British Airways and Regional Water Boards.
Privatisation could also involve deregulation — that is, permitting private sector participation by lifting restrictions to enable them to compete. The Open Skies policy of Rajiv Gandhi saw a number of airlines jostling for airspace, in the process making Indian Airlines, the virtual monopoly till then, more efficient and customer friendly.
Recent outright sale of whole or parts of PSUs has resulted in a few success stories in India. Sale of IBP for Rs 1,154 crore to IOC was followed in quick succession by sale of controlling interest in VSNL to the Tatas for Rs 3,689 crore; IPCL to Reliance for Rs 1,491 crore; Hindustan Zinc to Sterlite for Rs 445 crore and now the automotive sector flagship, Maruti Udyog, to Suzuki for Rs 2,424 crore.
Sale of land and property is also a highly profitable exercise. In the UK, tenants of local authorities were given the right to buy their own homes under the 1980 Housing Act. About 1.5 million houses were sold in the 1980s, and the amount realised was as much as from the sale of industries. However, a recent allotment of land to 219 government, social, educational, religious, and cultural institutions has reportedly resulted in the Union Urban Development Ministry drawing considerable political flak.
Reasons given for privatisation have been many, the first being that it generates a great deal of income for the government, giving rise to the now familiar allegation of selling `family silver'. In the exercise carried out in UK, the water companies fetched over $10 billion, British Gas about $13 billion, and British Petroleum over $12 billion. The Indian experience, in spite of the various allegations of a sell off to the private sector and other minor hiccups, has so far been quite encouraging.
In quite a few cases the PSUs were poorly managed, and lacked the incentive to make profit, since their main aim was to provide a public service. It has been argued that when privatised they would be forced to reduce costs by cutting down excess manpower, improving services and showing a profit. Sterlite's take over of Balco could be a test case and will hopefully prove to be a win-win situation for all involved, including its vast labour force.
It is argued that consequent to deregulation an organisation would be forced to improve services and charge competitive prices. It would be forced to innovate; consumers would benefit from reduced prices and also have a greater choice. The recent steep fall in airline tariff appears to have more than justified the deregulation and the Open Skies policy adopted nearly a decade back. Now thanks to the cellular wars, consumers have benefited from the continuing drop in telephone tariffs.
In the Indian scenario perhaps one of the most important gain would be that in the private sector; with little political interference, the PSUs would be free to plan their growth, set price and investment levels and so on, all determined by market forces.
Privatisation is also supposed to increase ownership of shares which would lead to a `property-owning democracy'. This would result in people having a stake in the success of the company and the economy in general.
Workers participation could be given a totally new meaning, with equity being given as bonus in a profit sharing exercise.
Undoubtedly, privatisation is expected to improve accountability to shareholders and consumers who would expect a better return on their investment and a better quality of services at a fair price. The bottomline would be to give customer satisfaction at the lowest possible unit cost, to be achieved by improved efficiency, higher productivity and better response to customer needs.
But to what extent has it been possible to achieve these objectives? What are the lessons learnt from the exercise carried out in the UK? Consequent to privatisation of telephones, electricity and gas supply the cost of services fell, and quality of performance also did improve. However, the consumers were in for a nasty shock when water supply companies raised the prices by 15 per cent, and buyers of new homes were required to cough up six times the previous charges for obtaining a pipe connection from the water mains!
Deregulation of the bus services outside London led to a fierce and somewhat unhealthy competition. For instance, in Manchester the 60-odd private operators resorted to speeding along the routes, trying to beat their competitors to bus stops, not unlike the infamous Red Line buses of Delhi!
Offices of Fair Trading (OFT) were deluged with complaints about `unfair' competition. The Monopolies and Mergers Commission complained about `unstable and potentially destructive competition with little or no benefit to the consumers', and called on the government to set up a `searching review'.
In all cases, privatisation did not lead to greater competition. For instance, some of the public monopolies have now become private monopolies and have only exploited their position to earn higher profits. It is now argued that some of the natural monopolies which had been sold off should have remained under government control to prevent duplication of resources. While it is too early to take stock and list out the lessons learnt in the ongoing exercise in India, eliminating political control and the resultant abuse of power and corruption could perhaps be the single most important gain. And that in itself is quite something for the one billion Indians to celebrate about!
(The author is a former Member (Mechanical) of the Railway Board.)
Govt flayed for ‘casual approach’ to disinvestment
Press Trust of India
Posted online: Sunday, May 18, 2003 at 1639 hours IST
New Delhi, May 18: Charging the government with adopting a casual approach on disinvestment, a Parliament standing committee has asked the Centre to come forward with a comprehensive policy document on disinvestment policy.
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"The committee once again desires that the government should take note of their recommendation seriously", the report of the standing committee on finance, headed by N Janardhana Reddy, and tabled in Parliament recently, said.
The report said policy makers, be it in the administrative ministries or in the state governments, occasionally face a dilemma. "They are often convinced about the merits of privatisation, but do not know how to implement it".
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The enormous outpouring of literature on privatisation, the dramatic success of privatisation in a number of diverse countries and the economic realities of excessive burden of overstretched public sector in their states have convinced them to try privatisation, the committee noted.
"Yet to most of them the process of implementing privatisation is often shrouded in mystery. This fear of the unknown often discourages them from taking the first step".
The report said the committee had taken serious note of the fact that the disinvestment process was being done on a case-to-case basis without any broad based comprehensive policy document that would give consistency to the disinvestment policy/process.
The committee was of the opinion that a decade long exposure and exercise with disinvestment was sufficient to equip the government with the requisite competence to bring out a uniform policy/procedure for disinvestment.
The Ministry of Disinvestment, during the examination, said the policy on disinvestment has evolved over time and its fundamental framework is stable over the medium term and is comprehensive and consistent.
It said all non-strategic PSUs are to be disinvested except IOC, ONGC and GAIL, where 51 per cent equity is to be retained and Oil India Limited that is not to be disinvested.
The areas that have been classified as strategic and which are not to be disinvested include arms and ammunition and the allied items of Defence equipment, Defence aircraft and warships.
Atomic energy (except in areas related to the generation of nuclear power and applications of radiation and radio-isotopes to agriculture medicine and non-strategic industries) and railway transport would also not be disinvested, the government said.
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Disinvestment policy to be reviewed From B L Kak NEW DELHI, May 4: Official announcement about a hike in rail passenger fares is expected anytime in the coming days. The Railway Ministry is, currently, giving final touches to the plan, which envisages a post-budget hike in fares and a cut in the Plan outlay for 2001-2002 financial year. The Railway’s Plan, which was prepared when Ms Mamata Banerjee was the Railway Minister, required to be corrected to make it more realistic. After this message was conveyed to the present Minister for Railways, Mr Nitish Kumar, by the Railway Board, high-level consultations took place. And, on more than one occasion, the Prime Minister, Mr Atal Behari Vajpayee, too was involved in the consultations. These consultations were also necessitated after a team of experts had made a pointed reference to the likely slippages in budgetary projections. Sources in the Railway Ministry said that slippages were anticipated both in internal revenue generation as well as private investments targeted under the Build Own Lease and Transfer (BOLT) scheme. These sources confirmed that passenger fares were not raised by the former Railway Minister, Ms Mamata Banerjee, in view of the Assembly elections in four States, including her home State, West Bengal, and one Union Territory. A final view on the timing of passenger fare revision, sources pointed out, would have to be taken by the political establishment. It was in this context that the Railway Board interacted with Mr Nitish Kumar on the question of seeking approval of all the constituents of the NDA Government. At the same time, indications were by no means uncertain that the Railway Ministry planned to go ahead with the cut in Plan outlay. And if these indications were any guide, the allocation, which was budgeted at Rs 11,090 crores for the current financial year, was expected to be slashed by 10 to 20 per cent. This, it was also pointed out, would impact investments under major heads including rolling stock procurement, new line projects and gauge conversion projects. The fund flow for the Rs 11,090-crore budgeted Plan includes Rs 3,540 crores as budget support and Rs 4,000 crores from market borrowings. The balance of 3,550 crores would come from internal resource generation. On the other hand, while the Centre’s disinvestment policy through sale of equity in public sector undertakings to strategic partners will be review in the near future, the NDA Government is said to have agreed to revert to the old proposal of divesting the shares of state-owned companies to the public and to institutional investors. The policy-makers seem to have been prompted to rethink the strategy on disinvestment in view of the controversy over the Balco sale, paucity of bidders and the possibility of "tainted companies" being awarded deals. The Cabinet Committee on Disinvestment is said to have been told by experts that spreading the shares widely among the public and institutional investors will not be a bad proposition at all. A top Government source told EXCELSIOR that the Prime Minister had been told by experts that the offer of shares to institutional investors would make a lot of political sense and gain acceptance across the political spectrum at a time like this when one comes across an extremely difficult political scenario with parties of various hues making up the NDA and the stand taken by the principal opposition party, the Congress, on the strategic sale. The Department of Disinvestment, the source said, was presently in the process of framing guidelines which would determine the eligibility of companies to take part in the disinvestment process. If corporate fraud is listed as a serious crime for banning companies from participating in the disinvestment process, many of the domestic firms may not be eligible to bid. |
| http://www.dailyexcelsior.com/01may05/national.htm#2 |
| ITDC looks for life after disinvestment 16 Aug 2001, 2157 hrs IST, Maneesh Pandey
can life be breathed again into the indian tourism development corporation (itdc), the pachyderm of hospitality trade? for nearly four decades the government-run itdc has dominated the scene, now earmarked to be parcelled off to private players. ashwani lohani, who has recently taken over as itdc chairman, is a die-hard optimist. despite disinvestment plans, this tourism department director who put 'fairy queen' back on the rails and secured for the darjeeling hill railway unesco heritage site status, outlines turnaround plans to maneesh pandey. excerpts: there is a frequent allegation that the government is not getting the real money out of its psus. how'll you ensure itdc properties get their value? the usp of the itdc properties is the excellent and prime location of the hotels in all major cities. itdc hotels are also known for their excellent food. besides, itdc is still regarded as one of the pioneers in the tourism sector in the country. we have to highlight these unique features, through aggressive result-oriented marketing. of course, we will back up our efforts through improved maintenance and better service. there is absolutely no reason why we will not be able to get the real value from itdc properties. : as you say, itdc has excellent and prime-location properties. should the government, instead of selling, lease these hotels and properties, and improve the finances? the disinvestment of itdc properties is a decision of the government of india which is being executed through the department of disinvestment. i can only say that we are aiming at improving the financial health of the company by way of improved operations despite the disinvestment process. tell me frankly, is there really any hope left for itdc? yes. what we have to realise is that our operations can still be made profitable as only our hotels are being disinvested. itdc will still remain. our hotel operations form roughly 50 per cent of our total operations. we can grow again though not necessarily in the same kind of operations. and most importantly, we're more hopeful for the fact the the drive to succeed has come from the top, the tourism minister, ananth kumar, himself. so, there's no backtracking on that front and we've to deliver the results. some of the enterprises (tatas, oberois, leela, etc) virtually started fromthescartch and are today awesome and reputed empires. why is the picture opposite with itdc? the inherent problems/constraints of government-run enterprises are too well known to be further elaborated. still, i would say that itdc has definitely grown over the years. however, it cannot be denied that it could have grown much more than what it has so far. you seem sure of generating funds with whatever you're left with. how? what're your plans and strategy in this direction? i have already told you that our focus is on improving the operations. our objective is very clear: aggressive, target-fed and result-oriented marketing. we believe in the ibm philosophy that everyone has to be involved in marketing. so i am also involved fully with my senior management team in the marketing effort. we're also looking at alternative sources of revenue generation: consultancy, event management and railway catering both on trains and at stations (food plazas) are areas under consideration. all these hold immense potential for revenue generation. we're also exploring other avenues which include hosting special events in hotels to generate interest in the property. our delhi hotels have planned around 15 food/special festivals in august/september alone and 20 more are scheduled in october/november. we are also looking with interest at forthcoming major events like the afro-asian games and pata conference. hosting big delegations in such events will help earn itdc both name and money. also a very intense and focused ''recovery drive'' is to start soon to recover dues. your itdc staff appear to have high hopes from various schemes. have they been offered anything special? i have not offered anything special to my staff. i have only told them that my desire is to see that the itdc relives its old glorious days. but yes, few things — they're free to convey their regrets, if any complaints, to me; the managers have been granted more autonomy, but i want results. i have always believed that the greatest strength and also the asset of any organisation is the human resource and handling them well is our primary focus area. do you hope to alter the sorry picture of unprofessional management and irritating services sector — a hallmark of goveernment enterprises? i agree the bottomline has to become green and that too, quickly. our strategy is basically to improve the working environment and to build a positive work culture. motivating and recognising the staff is top on agenda. i have already sent my signed message to all my 7000-plus staff. we are working on a scheme to bestow 'itdc-star' on our brightest staff. i am more than confident of their support and positive response. we shall aggressively introduce training at all levels and this coupled with motivational and other factors is bound to give noticeable results in a short time frame. on promotion and marketing front, itdc is nowhere in the race. travellers are more aware of smaller privately-managed hotels than your properties located all over india. how're you going to change that image? we're already looking into this aspect and made it a priority issue. the revamp has started and we will come out of the shell. you shall see more of itdc in the travel sector, be it marts, media or market. and all our plans are to start in a matter of days — we cannot afford to talk in terms of weeks or months. and finally, i would like to add that i believe that success or failure is a state of the mind. we have decided to succeed because we know we have the determination, strength and inherent capability to do so. and with support and encouragement of our result-oriented tourism minister, itdc's ''operation turn-around'' will succeed. |
Rural Railways and Disinvestment in Rural Areas
John Whitelegg
Regional Studies, 1987, vol. 21, issue 1, pages 55-63
Abstract: WHITELEGG, J. (1987) Rural railways and disinvestment in rural areas, Reg. Studies 21, 55--63. The paper examines railway policies in Britain over a twenty-year period with reference to the development of disinvestment in rural areas. Railway closures are discussed as one example of state disinvestment in rural areas with consequences for employment, social structures and the balance of power between different groups in rural communities. In the argument about the closure of lines these general issues may well be ignored but they have a significance which goes beyond individual closures and beyond railways themselves. WHITELEGG J. (1987) Chemins de fer ruraux et désinvestissement dans les zones rurales, Reg. Studies 21, 55--63. Cet article cherche à examiner la politique des chemins de fer en Grande-Bretagne sur une période de vingt ans quant au développement du désinvestissement dans les zones rurales. La fermeture des chemins de fer est discutée en tant qu'exemple du désinvestissement de l'Etat dans les zones rurales influant ainsi sur l'emploi, les structures sociales et l'equilibre entre divers groupes sociaux au sein des communautés rurales. En discutant de la fermeture des lignes il se peut qu'on n'ai pas pris ces questions générales en considération, mais leur importance va au-delà non seulement des fermetures individuelles mais aussi des chemins de fer eux-mêmes. WHITELEGG J. (1987) Ländliche Eisenbahnen und der Abzug von Kapitalanlagen in ländlichen Gebieten, Reg. Studies 21, 55--63. Diese Abhandlung untersucht die grund-sätzlichen Bestrebungen hinsichtlich des Eisenbahnnetzes während eines Zeitraums von zwanzig Jahren in Gross-britannien, wobei auf die Entwicklung des Abzugs von Kapitalanlagen hingewiesen wird. Stillegungen von Eisenbahnlinien werden als ein Beispiel des staatlichen Abzugs von Kapitalanlagen in ländlichen Gebieten mit ihren Folgeerscheinungen für den Stellenmarkt, die sozialen Stukturen und das Gleichgewicht der Kräfte unter ver-schiedenen Gruppen ländlicher Gemeinden besprochen. In der Debatte über die Stillegung von Linien mögen diese allgemeinen Erwägungen durchaus übersehen werden, doch sind sie von einer Bedeutung, die über einzelne Stillegungen und das Eisenbahnnetz selbst hinausreicht.
Keywords: Railway closures; Rural areas; Social processes; Fermeture des chemins de fer; Zones rurales; Processus sociaux; Eisenbahnstillegung; Ländliche Gebiete; Gesellschaftliche Prozesse (search for similar items in EconPapers)
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Defer disinvestment in OIL, ONGC: Commission
The Disinvestment Commission has said the proposed disinvestment in Oil India Limited and Oil and Natural Gas Corporation Limited should be deferred and suggested that no disinvestment should be made in Railway India Technical and Economic Services Limited till the uncertainty surrounding the Iraqi dues was resolved satisfactorily.
Releasing the Commission's third report in New Delhi on Friday, its chairman G V Ramakrishna recommended the induction of a strategic partner in the public sector Kudremukh Iron Ore Company Limited. He also said the shares of Mahanagar Telephone Nigam Limited and Container Corporation of India could be sold up to 49 per cent in a phased manner including offering of shares of MTNL to foreign investors.
The Commission has so far examined 15 public sector companies, out of the 50 referred to it. Out of the 15, the Commission has suggested strategic sale of five companies and offer of shares in case of three companies. However, the offer of shares at a later date was recommended in case of two companies while no disinvestment was suggested for one company. Outright sale was recommended in case of two companies while it had deferred its decision in case of two companies.
Ramakrishna said the Commission has expressed concern over the delays in implementing its recommendations on individual public sector units, particularly where the government's shareholding had to be reduced below 50 per cent or it involved strategic sale.
He said the delay may adversely affect negotiations which the PSU concerned might be carrying on with regard to joint ventures, long-term collaboration and similar other arrangements.
The Commission chairman suggested that there was a need to reduce the time lag between the submission of reports by the commission and the government's decision thereon. The Commission would like to point out that unless there is ''speedy implementation of the recommendations made in successive reports of the commission, it would be difficult to achieve disinvestment of the order of Rs 4,800 crore as envisaged by the government for 1997-98 besides the other objectives of the disinvestment process itself,'' he added.
Ramakrishna also expressed concern over the disinvestment in some loss-making PSUs without reference to the Commission. He said, ''This will not only be contrary to the major objectives and terms of reference of the Commission but also prevent the Commission from taking a coordinated view of disinvestment in PSUs in accordance with a broad-based strategy.''
The Commission noted with concern that even where disinvestment has already taken place, there was no change in the composition of board to give representation to the non-government share-holder.
In order to improve the investors's perception of PSUs and to enhance share value in subsequent investment, it was necessary to induct representatives of non-government share-holders immediately by amending the articles of association, where necessary.
The Commission has also recommended induction of experts and professionals from outside as non-executive directors to inspire investors's confidence in the disinvestment process, Ramakrishna said.
He said the Commission was happy to note the government's move of giving greater autonomy to nine selected PSUs. The Commission has already made recommendations for graded delegation of autonomy, he added.
Ramakrishna said the government holdings in Concor may be restricted to 10 million shares and the company may go in for a public issue of 12.5 million shares, to bring down the government holding to around 51 per cent.
It also recommended that a book-building process be adopted to make institutional investors disinvest in the Indian market, which could be followed with a retail offering to small investors at a discount of 10 per cent. The company can also join the National Securities Depository Limited before any issue is contemplated from either the company or from the government.
Small investors should be allowed to buy shares in quantities much less than normal tradeable lots, which can also be traded on National Securities Exchange with discount for odd lots.
With regard to KLOCL, Ramakrishna said the Commission has recommended strengthening the management of the company by appointing a competent chief executive and inducting competent professionals from outside on the board.
The Commission also favours the induction of a strategic partner into the company by offering 30 per cent of equity. The government may also enter into an agreement with the strategic partner providing for a further dilution of government equity to the extent of 43 per cent within two years through a combination of further offer of equity shares of 10 per cent to the strategic partner and public offer of balance to domestic institutional investors and real investors. This would leave 26 per cent of the equity with the government, Ramakrishna added.
Such phased disinvestment, he said, would enable the government to realise a proper value of its shares.
With regard to the MTNL, the Commission has pointed out that 34.27 per cent shares of the company have already been disinvested leaving a balance of 14.73 per cent or 88.3 million shares for disinvestment. The commission has recommended a global depository receipts issue of 60 million shares (10 per cent). After the GDR issue, a domestic offer of balance 28.3 million shares may be made to the institutional investors and small individual investors at a discount price over the institutional prices.
The Commission noted that the MTNL has an impressive track record and was a ''strong performer'' in the past 10 years. It recommended full autonomy to the board to enable it to conduct its operations successfully in the increasingly competitive environment.
As for OIL, the commission recommended that disinvestment of government shares as also the company's own initial public offer need not be considered for the present. This can be considered after a year or so when the company's own prospects would be clearly established through the outcome of exploration activities in North Brahmaputra area and the government's policy on administrated pricing mechanism.
Ramakrishna said the scope for disinvestment of government shares could be determined after balancing the requirement of the company funds. Any disinvestment prior to it would result in a loss to the exchequer as an announcement regarding the dismantling of APM would significantly improve the share value. The commission would like to review the position after a year and make specific recommendations on disinvestment in the company.
In ONGC's case, the Commission has suggested reviewing the position from time to time and making recommendations at the appropriate time considering various factors.
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