Government can get much better valuation for disinvestments

Government can get much better valuation for disinvestments

Government has chalked out large divestment programme again. After a failed ONGC issue, outcry of large foreign investor in Coal India, what should be governemnt doing?

Solution to several economic issues is to keep all resources prices linked to markt prices. Let ONGC, CIL sell Oil & Coal at market price and their profits will zoom. Let IOC, BPCL and HPCL charge for Petrol/Diesel based on market orces and let them earn refining margins without subjecting them to cough up part of oil subsidies.

From higher profits, Govt can get much higher dividends and using that dividend, it can directly subsidize end product like Power, Diesel or LPG rather than indirectly subsidizing by keeping prices lower and jeopardiing interests of minority hareholders. Government can charge for land acquisition, more genuiene figure for Royalty, so that argument of subsidiing inputs for these companies can also be addressed.

Linking prices to market will also help in getting much better valuation for these Navratna companies while government undertakes disinvestments.

If goverment continue to plan to intervene with business operations in companies that it owns, It is better to buy-out miority shareholders and De-list these companies. Let government alone bear the consequences of populist/socialist agenda by taking full control of these companies i.e. 100% equity stake.

How can someone invest in country when its ministers tell shareholders to leave (sell out) if they are not happy!! I am yet to come across such statements by anyother country especially when India does so many roadshows abroad to attract investments in indian economy.