The might of the developing nations is gradually making its presence felt. Members of the World Bank have agreed to support a US$ 5.1 bn increase in its operating capital and to give developing economies a greater say in running the antipoverty institution. China will now become the bank’s third-largest shareholder, ahead of Germany, but after the US and Japan. What is more, countries like Brazil, India, Indonesia and Vietnam will also have greater representation.
This is hardly surprising. Developing nations (especially the BRIC nations) had been growing at a scorching pace before the crisis erupted and their resilience was evident during the crisis as well. Even though these nations reported a slowdown in growth when the crisis heightened, the growth rate was still way above that of the rich world, which had slumped into recession. Little wonder then countries such as China and India began demanding a greater say in matters pertaining to the IMF and the World Bank. And that these countries will now have more representation in affairs of the World only highlights the growing acceptance of the clout that the emerging nations are likely to have in the future.
The Indian government had set an ambitious target as far as its disinvestment plans were concerned. It was planning to come out with one public issue every third week in FY11. But given the lukewarm response that many issues from state-run companies have received, the target has now been scaled down to 8 companies this year. What is more, the government was aiming to mop up Rs 400 bn from disinvestment proceeds; a target which seems like a tall order now.
A significant part of the disinvestment target would be met through stake sales in companies such as Coal India Ltd (CIL) and Steel Authority of India Ltd (SAIL). The other big issues would be BSNL and MMTC. However, all is not hunky dory. The government will have to deal with challenges such as finding the right valuations for its issues and sorting out trade union issues. In FY10, the government had raised Rs 236 bn by selling its stake in five companies. This was around Rs 14 bn lower than its target of Rs 250 bn. NMDC was the biggest issue in that fiscal. This fiscal too, this is another of the various targets that the government looks likely to miss.