The United Progressive Alliance has an opportune chance to make due on its promise to liberalize state-owned behemoths. Bloomberg reported on Wednesday that state-owned Rural Electrification Corp. Ltd (REC) is looking for government approval to raise $635 million (Rs3,004 crore) by selling shares worth 20% of its equity.
This is the kind of activity the government should encourage from a firm such as REC. Credit is tight, the economy is sluggish and rural India is ailing for better electrical infrastructure.
Selling this equity will not only help the company raise capital, but will also involve a larger group of people—REC’s new shareholders—in important infrastructure projects for rural India.
That’s significant: Government-sponsored infrastructure projects, such as electrification, often suffer from mismanagement and a lack of oversight. Having to address shareholder concerns will add a layer of accountability to REC and its projects. That could, indeed, be a light bulb moment.