ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Getting Best Value

The government has decided to reduce its stake in Videsh Sanchar Nigam Ltd (VSNL) from the present level of 52.97 per cent to 26 per cent by selling 25 per cent to a strategic partner who would have management control and the balance 1.97 per cent to employees. The decision is in conformity with the desirable objective of extricating the state from the provision of commercial services and concentrating its efforts on the supply of public goods that the state alone can provide. However, the way the government is going about the disinvestment process gives scope for disquiet.

The government has decided to reduce its stake in Videsh Sanchar Nigam Ltd (VSNL) from the present level of 52.97 per cent to 26 per cent by selling 25 per cent to a strategic partner who would have management control and the balance 1.97 per cent to employees. The decision is in conformity with the desirable objective of extricating the state from the provision of commercial services and concentrating its efforts on the supply of public goods that the state alone can provide. However, the way the government is going about the disinvestment process gives scope for disquiet.

There are, in the main, two things wrong with the proposed process of disinvestment. For one, it is taking place before the government has put in place its policy on convergence in communications. For another, the government has chosen to restrict the field of suitors for VSNL by prescribing a minimum net worth of Rs 2,500 crore as a pre-qualification to bid for control of the company. Both conditions would come in the way of the government getting the best possible price for the equity stake being sold off. And these conditions have the potential of VSNL being denied the opportunity to make the best use of its assets, including human resources, in India’s fast growing communications sector. In the process, the government would work against the two legitimate goals of disinvestment.

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