A day after Prime Minister Narendra Modi said the “government has no business to be in business”, India Inc on Thursday said privatisation, except in strategic sectors, would unleash exciting opportunities, boost investments in infrastructure, and create jobs.
However, the industry called for an effective implementation of road map towards privatisation and asset monetisation, cautioning that regulatory and legal hurdles should not derail the process.
FICCI President Uday Shankar said senior government functionaries and other officials responsible for the execution of the programme would adopt a highly cautious approach in case they are not insulated from the outcome of their bona fide decisions.
“Wisdom gained in hindsight should not be used to question the judgement of the decision-takers and such officers should be offered protection for their action done in good faith,” he said.
The FICCI president emphasised that the quality of the asset is as important as the credibility of the process. In addition to being fair and transparent, the process should have smooth sailing and adhere to projected timelines, Shankar said.
He also stressed that asset valuation is contextual and price discovery through an objective and transparent manner should be acceptable.
Modi on Wednesday said the government has no business to be in business and his administration is committed to privatising all public sector undertakings (PSUs) barring the bare minimum in four strategic sectors.
He also said the Centre’s policy is to either monetise or modernise public sector enterprises, with the intent that the government has “no business to be in business”.
“The prime minister has conveyed his message loud and clear that the focus of the government would be on the welfare of people and not in running business enterprises. His statement that the government has no business to be in business leaves no doubt in the mind of the policymakers,” Assocham Secretary General Deepak Sood said.
He expressed confidence that the strong message from the prime minister would lead to the desired results.
In the process of privatisation, except in strategic areas, India would see unleashing of tremendous growth potential, required to meet the aspirations of our people and taking us towards the $5-trillion mark, Sood said.
Speaking at a webinar on privatisation by the Department of Investment and Public Asset Management (DIPAM), Modi had said the Budget has given a clear road map to take India to a high growth trajectory.
Fiscal support to sick PSUs puts the burden on the economy, and public sector units should not be run just because of legacy, the prime minister said. He added that many PSUs are loss-making and supported by taxpayers’ money.
The government has many under-utilised and unutilised assets, and 100 assets would be monetised to garner Rs 2.5 lakh crore, Modi added.
The FICCI president also highlighted the importance of the design of the auction. He said it should not be a non-starter nor should it lead to extensive competition, which may impair implementation.
While revenue maximisation is the desired objective, larger good in terms of making the resource available to the public should over-ride everything else, Shankar said.
In case of reverse auction, a bidding war can lead to the winner’s curse, making the whole deal unviable. There should be some degree of rationality in the design of the auction, he added.
Shankar observed that advisers should be appointed through careful consideration and should have an international presence and network.
Appointing the lowest bidder does not always ensure effective discharge of responsibility. Undoubtedly, there are questions on the capability of the lowest bidder. There is a need to qualitatively qualify the advisers, the FICCI president said.
CII Director General Chandrajit Banerjee said, “The prime minister has given a strong statement that the government has no business to be in business, which is a morale booster shot for entrepreneurs. His words reflect a mindset change in the government that its responsibility is to fully support businesses and enterprises, and the agenda of disinvestment, privatisation, and monetisation of assets that he has unleashed strengthens the confidence of the industry.”
He added that privatisation would contribute significantly towards improving competency within enterprises and would build resource efficiency among units. “The mantra of ‘monetise or modernise’ is a powerful statement for better utilisation of resources with global best practices.”