Budget must focus on PSU privatisation and revival of PPP: CII

Budget must focus on PSU privatisation and revival of PPP: CII

CII President wants public-private partnership disputes to be resolved.

The Dollar Business Bureau

From Budget 2017, CII demands privatisation of 100 public sector units along with construction of 50 railway stations via public-private partnership (PPP) by the end of 2017.

In order to boost the shrinking private investment, CII President Naushad Forbes wants all disputes involving public-private partnerships to be resolved. Resolution of these long pending disputes will, according to him, bring back positivity in investor sentiment.

"By December 2017 we should do three things -- we should privatise 100 firms, we should ensure all pending disputes of PPPs are resolved using the Kelkar Committee recommendations and we should have 50 train stations developed by public- private partnership (PPP) mode," he said.

The Kelkar Committee, headed by former finance secretary Viijay Kelkar, in December 2015, had looked into some fundamental issues which were clogging the PPP model. The salient recommendations of the committee were to revive 3P India, an advisory body for PPP projects; to allocate risks rationally among various stakeholders in PPP; to allot independent regulators for PPP projects; to amend the Prevention of Corruption Act so that actual graft and genuine errors may be differentiated; and to boost making of airports, seaports and railway stations via PPP.

Contrary to the popular idea that public sector companies buried in losses must be off-loaded to the private sector, Forbes proposed that even the profitable ones must be privatised. Making a toungue-in-cheek comment, he said that he doubted there would be a long queue of private players willing to buy loss making PSUs.

Niti Ayog has so far identified 74 PSUs for divestments. Forbes also said that there is no good reason anymore for the government to own Ashoka Hotel and Air India, which has recently showed drastic financial improvement.

Although these demands are in line with PM Narendra Modi's motto of 'minimum government, maximum governance', the road to privatisation is littered with obstacles, posed by the opposition and labour unions. After much dilly-dallying, the Centre has finally begun its divestment drive with a strategic sale in the defence equipment manufacturer, BEML. In budget 2016-17, the government had set an aim to collect 56,500 crore from disinvestment in PSUs. It is yet to be seen whether the government will continue to set high targets for privatisation despite failing to meet them successively for two years. 

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The Dollar Business Bureau - Jan 31, 2017 12:00 IST