Sunday, July 09, 2017

Air India is a very good asset: Amitabh Kant

Half of India’s 235 operating Central Public Sector Enterprises (CPSEs) are under scrutiny for a possible disinvestment. NITI Aayog, the government think tank that was assigned to analyse and recommend stake sales, has been examining 115 CPSEs. Of these, it has already recommended the strategic disinvestment of 38 companies — plus four units of two CPSEs — the most prominent being India’s national carrier, Air India.

While talking to The Economic Times , NITI Aayog’s CEO Amitabh Kant spells out the basic philosophy of recommending disinvestment in Air India, Shipping Corporation of IndiaBSE 3.53 % and other biggies: “Our view is largely based on the fact that other than in strategic areas, say defence, there is no rationale for the government to be in the business of being in business”. Edited excerpts from the interview:

NITI Aayog till now has recommended disinvestment of a large number of government run companies, including Air India. Will the government go forward on these?

NITI Aayog was first asked by the government to examine the cases of 74 sick, loss-making and non-performing CPSEs. After a detailed analysis, we recommended closure of 26 such CPSEs. Of those, 16 companies have either received cabinet approval (for closure) or are in the process of liquidation. So, the government has moved very fast on the recommendation of NITI so far as sick, lossmaking, non-performing CPSEs are concerned.
NITI Aayog was also asked (by the government) to function like a disinvestment commission. So far, it has submitted four tranches of recommendations on strategic disinvestments. In its first tranche, it recommended 14 CPSEs for strategic disinvestment. In the second tranche, it recommended eight CPSEs plus four units of two CPSEs; in the third tranche, we recommended 10 CPSEs; and in the fourth tranche, the names of six CPSEs, namely Air India and its five subsidiaries, were listed for disinvestment. Over all, 38 CPSEs plus four units of two CPSEs have been recommended for strategic disinvestment. The Cabinet Committee on Economic Affairs (a PM-chaired committee currently with 11 cabinet ministers as members and three as special invitees) has already given approval to 23 of those companies that we had recommended for disinvestment.

What’s the philosophy behind your recommendations on which CPSE should stay and which should go?
NITI Aayog has moved in a very expeditious manner to make strategic disinvestment. Our view is largely based on the fact that other than in strategic areas, say defence, there is no rationale for the government to be in the business of being in business. The government should spend money on health, education, nutrition and improvement of social indicators. India has a long way to go in human indices; so we should have adequate resources in those areas. And the government should put its full might behind sectors that will improve our human development index and quality of life. So businesses are best left to the business people. The government should be there only in areas of strategic interest, where its presence is absolutely necessary. The others should be left to the private sector.
09/07/17 Shantanu Nandan Sharma/Economic Times