Sunday, November 11, 2007

There is nothing to thank the Left for

[First, let us acknowledge that there is something to thank the Left for. When the Left announced its opposition to disinvestment after the UPA government came to power, the Sensex tanked. Critics of the Left yelled highway murder. This is the end of the rise in the Sensex, they said. We know now it was only the beginning...
There is a lesson in humility for firebrand reformers in the phenomenal increase in the market capitalisation of PSUs and PSBs. The reforms brigade could not have imagined that disinvestment, the gradual sale of government equity, could produce such results. They believed that disinvestment was a disaster as the value of PSUs and PSBs would only erode with time. The best way for government to maximise its revenues was to go for strategic sale, the transfer of a controlling stake to private companies.
These assertions have turned out to be completely wrong. The writer was almost alone in arguing that disinvestment, far from being a political compromise in India, had, in fact, been the dominant mode of privatisation worldwide and that it had produced splendid results. Strategic sale was rarer and happened more in economies with underdeveloped capital markets.
On a broader note, the evolution of the Indian economy has shown that there is little room for certitudes of any kind and that a scrupulous regard for the democratic process and respect for minority viewpoints on contentious issues are in order. In the case of disinvestment, what was interpreted as cussedness on the part of the Left has worked to the benefit of government. A point worth remembering in the heated debate on the Indo-US nuclear deal. -- T T Ram Mohan, Professor, Finance and Accounting Area, Indian Institute of Management Ahmedabad, Booming Sensex, smiling GoI The Economic Times 1 Nov, 2007]
Obviously, our Professor has not computed the enormous losses that the economy as a whole has suffered due to stalling of the strategic sale and disinvestment schedules. The Leftists are clearly working at the behest of China and are practicing a politics of conspiracy. One fails to understand the logical validity of how an opinion becomes the right one just because it emanates from the minority. [TNM]

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