Of all the sectors slated for that dirty word disinvestment, the mining sector probably is the easiest to tackle. It does not employ a huge number of employees as other public sector enterprises do. Absence of vertical integration across different ores into a single entity of the kind that Rio Tinto is in the private sector too makes life easy for government.
Today, however, all the bad ideas are coming from the government. Here is the latest of the best: The Union ministry of mines has told the finance ministry that it is not in favour of diluting government equity in National Aluminium Co. (Nalco). The minister, B.K. Handique, says the board of Nalco is not in favour of disinvestment.
This is a curious situation. The government is the single biggest owner of Nalco stock. And it is up to the owner to do what it pleases. There is, of course, the question of the rationale of disinvestment. But that is a different matter. If the government wants to sell Nalco equity for raising money, it is free to do so. The question arises as to what it does with that money, not its right to disinvest.
It is that right which is being questioned, however indirectly. A company board has no business telling shareholders what they do with their shares. The Nalco board just did that.
The matter is overtly political. Nalco is headquartered in Orissa. Unsurprisingly, state chief minister Naveen Patnaik has also opposed any move to dilute the government’s holding in the company. Other state-level politicians have also joined the chorus in a competitive raising of voices against the proposed sale.
One argument against disinvestment is that many profitable public sector units, especially the so-called maharatnas and navratnas, are not loss-making enterprises and hence there is no need to sell their equity or transfer their management to private hands. This defies the logic of privatization. This step is not taken out of some whim of the government. This stems from a worldview where the government is seen to have a legitimate role in a certain sphere and not everywhere. Manufacturing soap and aluminium and running hotels don’t fall in any government’s competence. To rebut this by saying that a company is profitable or is sitting on a pile of money or does not need funds is no argument at all.
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