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Privatisations becoming routine in India: WSJ

In once-socialist India, privatisations are becoming routine with Divestment Minister Arun Shourie conducting a "clean and transparent" sell-off process enabling the government to mop up about $2 billion during 2001-02, a media report said on Friday.

Praising Shourie for his handling of privatisation, the Wall Street Journal said since the start of the year, India has sold more government-run firms than it did in the previous decade.

No fewer than 17 companies -- some large, some small -- have been moved, it said.

By all accounts, said the paper, "Shourie has conducted a clean and transparent process to date. Indeed, privatisation has made huge strides during his tenure."

In the decade since India's economic liberalisation began, various governments have paid lip service to the concept by selling stakes piecemeal in order to generate much-needed cash, the journal said, adding today, "Shourie aims to get the government entirely out of management, by selling stakes of 26-100 per cent."

"The soft-spoken Shourie has doggedly pushed privatisation despite opposition from labour unions, political parties and some of the government's own ministers. He has prevailed in court cases and parliamentary debates aimed at obstructing sales of public companies. Now, he plans to sell significant stakes in a further 20-odd state companies before April," the Journal said.

One area where Shourie has been less successful, is in luring foreign investors, who, despite much interest, have made few bids, the paper noted.

The Journal quoting investment bankers said: "That reticence, however, may change when several big ticket companies go on the block this year. Several are leaders in their businesses -- Bharat Petroleum, Hindustan Petroleum and National Aluminium for example."

Such companies have already attracted the attention of big name multinationals, says Ajay Sondhi, managing director of Kotak Mahindra Capital.

Anyway, Shourie is more interested in another type of foreign investment, the paper said.

"Each time I am asked to speak to foreign investors, I say, 'Please go for greenfield projects, not for acquisitions," it said quoting Shourie.

His logic is: Acquisitions risk sparking a backlash that could set back liberalisation, the paper added.

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