It has both political and commercial significance. The decision of the Congress Party-led state government in Punjab to sell the government’s stake in Punjab Tractors Limited (PTL) has a significance that goes beyond the Rs 218 crore that the state government managed to get from the UK-based CDC Capital group for the sale of 23.5 per cent of the company’s shareholding. To begin with there is the commercial aspect. This is probably the first time that a major company is owned by a clutch of financial institutions and neither a private promoter nor the government is the dominant shareholder. It will be interesting to see how the relationship between shareholders and managers is impacted by this ownership structure and what it means for the company’s day-to-day functioning. The more important aspect of the sale is the fact that a Congress party government has not shied away from outright privatisation of a profit-making public sector company. This goes contrary to the view of a sizeable section of the Congress against such privatisation. The case of PTL should inspire the ruling NDA government to take courage and press full steam ahead with its privatisation programme. The decision of the Punjab chief minister, Captain Amarinder Singh, should strengthen the hands of disinvestment minister Arun Shourie and the advocates of speedier privatisation of PSUs in non-strategic areas. The fact is that such privatisation has also helped exert pressure on PSUs in the so-called strategic sectors to perform better. Recent reports regarding the corporate successes of Bharat Heavy Electricals Limited and the gains made by public sector oil and gas companies show that the fear of competition and privatisation can energise this sector to also perform better. The privatisation of PTL is one among many examples at the state level of outright privatisation. More than any ideological conviction, it is fiscal bankruptcy that is driving such privatisation. What is important about this deal, though, is that it has been handled transparently and without controversy. This is the key to successful privatisation. Transparency alone can reinforce public confidence in what is otherwise dubbed as the sale of “family silver” or the pursuit of “crony capitalism”.
