The share sale by public sector company Rural Electrification Corp. Ltd went down to the wire, garnering enough investor interest in the dying hours of the offer. Earlier, the share sale by NTPC Ltd also had a rough voyage through the primary market.
The two troubled share offers raise several important questions about the auction method employed by the government and the lifeline thrown by a few state-owned financial firms to save the follow-on offers from sinking. There will also be doubts about investor appetite for public sector shares.
These issues will have to be sorted out soon. However, it would be wrong to abandon gradual privatization just when the ship has got some wind in its sails. Nor would it make sense to go for a safer option: strategic sales to private sector companies that will be ready to pay better prices for corporate control.
India needs privatization to raise efficiency levels, using the proceeds to fund critical hard and soft infrastructure while ensuring that national assets are widely held.