• DECEMBER 1, 1999

The Disinvestment Commission passes off into oblivion

In the absence of any official communication from the new government the term of the first Disinvestment Commission came to an end on the 30th of November. The Chairman, Dr G V Ramakrishna, along with the other members of the commission, has already submitted his resignation in view of the installation of the new government at the centre.

The Disinvestment Commission had laid down five major suggestions for the manner in which the entire exercise should be conducted:

  • Delinking the disinvestment exercise from the budget
  • Selling shares of public sector units at an opportune time
  • Retailing shares in the domestic market
  • Proceeds from the disinvestment to be used for infrastructure and retiring public debt
  • Setting up of a full time implementation machinery

The first of these suggestions state that the proceeds should not be used to finance the budget deficit of the government. Infact the proceeds should be used for other purposes that have been explicitly stated. The government seems to have put into practice only the recommendation pertaining to the retailing of shares in the domestic market.

The absence of the commission will create a vacuum in the disinvestment process. Although, most of the recommendations of the commission are yet to be implemented, having a full time authority looking at the disinvestment issue in a professional manner brought in a degree of transparency in the entire process. The government needs to put in place another commission as soon as possible to ensure that an independent body continues to guide the disinvestment process. This will limit the level of politicisation of the entire process.

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