During 1999-2004, the NDA government was able to raise Rs 10,350 crore through strategic sale method. An ambitious target of Rs 78,000 crore had been set from the sale of its equity in PSUs during the 10th Plan (1 April 2002 to 31 March 2007) but the process was cut short when a Congress-led alliance came into power. “This process, which came to a grinding halt when the UPA took charge, needs to be revived. We can argue about the best method and find fault with the prices at which companies were sold, but there’s no denying the fact that the government needs to stick to governing. Focus on education, law and order, health, rural reform — not run airlines, hotels and make cars,” says a senior Planning Commission official.

In the power sector, for instance, all files and administrative approvals for disinvestment of equity in enterprises such as NTPC, NHPC and PGCIL are in place. These alone can bring in at least Rs 8,000 crore. “But there has been a freeze on all this, which needs to now thaw,” says a power ministry official. It is not the money that is important. What is important is the increased efficiencies that will result if the sales are made to the right bidders, says one bureaucrat.

Not only does the government have no business being in many areas, proceeds from disinvestment can provide a much needed cushion at a time when borrowing is rising and the potential to raise revenue from taxes is limited. “It’s quite simple. Where will the money come from? Government borrowing is rising and you can’t hike taxes beyond a point. Even if just Rs 10,000 crore a year came in, it would be better than nothing,” says a finance ministry source. In many cases — such as Air India — the government would not be addled with their huge losses due to inefficient running.

Jayesh Desai, a senior partner with Ernst & Young, says, “I think we need to start working on balancing our budget by getting rid of assets through a structured programme so that we can spend more on major priorities — education, healthcare and infrastructure. It will have the added bonus of making PSUs more efficient.”

SLOW LANE: About 50 per cent of highway project tenders are yet to be awarded (Pic by Amit Verma)

Fix The Infrastructure
India’s infrastructure is creaking and there is no getting away from the fact. Moving fast on infrastructure is a priority for two reasons. One, you cannot expect to grow at a fast clip in the long term if your infrastructure is lagging behind. Two, spending on infrastructure can immediately bring huge benefits in kick-starting the economy from the current slothful state.

However, within the vast area of infrastructure, there are two crises brewing that need immediate attention. One is the failure of power reforms (to become a superpower, you first need power) and the second is the snail-like pace of highway construction, which is crucial for rural development — if you cannot reach them, you cannot help them. The basic problem with infrastructure does not lie in bad policy, though — indeed it can be argued that the correct policies are already in place. The problem lies in executing those policies properly. Though the government has time and again put infrastructure on the front burner, it has failed miserably to get its act together.

Consider power first. At the beginning of the 10th Plan, the peak shortage of power was 12 per cent. At the end of the Plan, it went up to 16 per cent. This single fact tells the story. Also, against the target of 78,000 MW, the actual commissioning of additional generating capacity in the first two years of the 11th Plan has been 12,700 MW.

The Electricity Act of 2001 (enacted in 2003) is yet to be implemented in its true letter and spirit. “This has been one of the biggest failures of successive governments. You have to allow producers of power to sell directly to consumers. Take the telecommunications sector. How far would we have got if telecom companies could only sell to DoT or MTNL?” asks a senior government official.