He's a political survivor. Each time the disinvestment din has sought to drown his lone, soft voice, he has resurfaced as a stronger force. Remember the cabinet reshuffle in January, when it was almost certain that he'd be stripped off the disinvestment portfolio? Not only did he retain it, he got additional charge of telecom and IT. That's Arun Shourie for you—a politician with a never-say-die spirit, one who has the uncanny ability to bounce back.
But this time, even Shourie's seemingly unfailing skills will be severely put to test. For, last week's Supreme Court judgement has virtually put a halt to the ongoing disinvestment process. As Shourie admitted in an exclusive telephonic interview from Berlin, "This is a major setback to the entire disinvestment process." In fact, most experts feel nothing more of any consequence will happen on the PSU privatisation front until 2005, or until a new government takes charge after next year's general elections. That'll be a big blow to big-ticket sell-offs that were being touted as the pinnacle of the NDA government's reforms process.
What the apex court said was that the Centre cannot immediately sell the two oil PSUs, Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL). Since the two were set up under parliamentary acts, the court concluded the government needs to take prior clearance from the legislature. In one stroke, it put the brakes on the sale of other PSUs which too had been set up under similar statutes.
A frustrated Shourie feels the court's decision is not in the right spirit. "How can it be that to close down a (state-owned) company you don't need to go to Parliament, but for its disinvestment you have to seek Parliament's approval?" he questions. Still, the fact is that the Supreme Court judgement cannot be challenged. All that the government can seek is a limited review by the same two-judge bench for mistakes of law or errors on record. So, the minister will have to learn to live with it.
Shourie realises it will be tough to push through the required legislation. For one, the judgement has brought to the surface the simmering fissures within the BJP and the NDA constituents on the issue of disinvestment. A few hours after the court ruling, an elated petroleum minister Ram Naik hailed the Supreme Court verdict as "historic" and added that "we'll respect its (the court's) decision." Don't forget that Naik was a member of "the gang of four" (including defence minister George Fernandes, the former mines minister Uma Bharati and hrd minister Murli Manohar Joshi) that had asked for a review of the entire privatisation process late last year.
Logically, this gang, with help from other critics like the fertiliser minister Sukhdev Dhindsa, will become active again. Despite the moves within the BJP to underplay the tensions. For instance, BJP's spokesperson M.A. Naqvi, while commenting on the contrasting statements by Shourie and Naik, said that "dono ki bhavna ek hai." The rough translation of the statement is an indigestible one: "Both the ministers think alike."
So, like in the past, Prime Minister Atal Behari Vajpayee may have to intervene to iron out the differences within the BJP and the NDA yet again. That's why some BJP members are unhappy with the way the two ministers have reacted. "They've both made emotional outbursts. Instead, they should display a detached attitude. Shourie ought to accept the limitations of a democratic set-up, where the judiciary, the media, and the public play key roles," says one of them.
But even if Shourie and Naik fall in line, getting a parliamentary green signal will be a difficult task. All the Opposition parties, including the Congress, are against the sale of the two oil PSUs."Parliament will now have to be actively involved in the (disinvestment) process and PSUs cannot be sold against its will anymore," explains senior Congress leader Priyaranjan Das Munshi. The party's spokesperson adds that while they are not against privatisation, they had decided to oppose the sale of BPCL and HPCL since the two are part of the "strategic" energy sector.
The NDA, with a majority in the Lok Sabha, doesn't have the numbers to push through a legislation in the Rajya Sabha unless it gets outside support. The way out is to go in for a joint parliamentary session, where the numbers are in the NDA's favour. Or wait for a few months, when the Rajya Sabha composition is likely to change and give it a simple majority. Anyway, the winter session of Parliament will start in October, which gives the BJP some breathing space to evolve a political consensus.
Still, the BJP may not like to introduce legislation on such a politically sensitive issue, and allow Opposition parties to benefit from the ensuing parliamentary debates. "I don't think the government will go to Parliament with it before the elections are over," says Y.K. Modi, vice president, ficci. Omkar Goswami, cii's chief economist, adds that the judgement will be used to create needless political strife just when the disinvestment process was getting de-politicised.
Without revealing his future course of action, Shourie only says the government will have to study the judgement. "We will consult the law minister and the attorney-general to formulate our strategy. Our options will then be placed before the cabinet committee on disinvestment, which meets on October 3," he explained. A few optimists feel Shourie will come up with some solution or the other. "Because the government has taken a decision to sell the two oil companies, it will find a 'raasta'," says Hasubhai Dave, president, Bharatiya Mazdoor Sangh, the BJP-controlled trade union.
Despite this legal defeat, Shourie can still come out a winner. For starters, he can cajole the prime minister to allow him to pursue his disinvestment dreams. As long as his minister doesn't rock the BJP politically, Vajpayee will be keen to preserve his own pro-reforms image. So, Shourie will have to keep his moves outside politics, and within the legal ambit.
Sources close to Shourie say that one idea is to legally differentiate between ownership and management control. What this means is that the government may continue to retain 51 per cent stake in a PSU but legally give management control to the successful bidder. In such a case, no permission will be required from Parliament. In the case of BPCL, which was to be sold through the public issue route and in which the government's holding is 66.2 per cent, the government can dilute its stake by only 15% instead of the proposed 35.2 per cent, and continue to retain 51 per cent.
Another strategy to get the momentum going could be to sell minority stakes in PSUs not on the disinvestment list through the public issue route. Last year, the disinvestment ministry concluded that the government could easily raise
Rs 50,000 crore in a single year. A major chunk of that was to come from public issues of PSUs that were not on the privatisation list. Today, the scrip prices of these PSUs have gone up further and the logic for public dilution of government stake has only been strengthened.
However, the legalities need to be sorted out. Or else it will embarrass the BJP as it happened with the attorney-general's opinion on BPCL and HPCL, which the Supreme Court judgement disagreed with totally. Agrees Prashant Bhushan, Delhi-based lawyer, "The attorney-general has a track record of giving advice that was either convenient or suited the powers-that-be." The attorney-general's supporters contend he had no choice on BPCL and HPCL but to give a favourable opinion that suited the government.
For Shourie, though, the mix of strategies will imply a climbdown since he has favoured strategic sales to public issues. But these moves will help retain his image of being serious about privatisation and also send the right signals to foreign investors and the stockmarkets. (BPCL and HPCL stocks lost 10 and 21 per cent, respectively, during the four trading days after the verdict last week).
A combination will also help the government to tide over its fiscal deficit problems, since the target for disinvestment proceeds this fiscal was Rs 13,000 crore. More than that, the plan will receive a thumbs up from Shourie's critics, who have supported the public dilution route. But for it to succeed, Shourie will have to step back a little—something he has rarely done before.
By Suveen K. Sinha, Arindam Mukherjee and Gauri Bhatia with Saumya Roy in Mumbai
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