Sinha strikes back at Chidambaram

quoting at a high of Rs 315 on June 17, 1997, but the government did not disinvest at this price. By October the prices fell to Rs 275, and on December 2, Chidambaram’s government approved the sale at Rs 233 per share — three weeks later, after the government had sold cheap, prices rose to Rs 268. So, Chidambaram don’t preach, was Sinha’s refrain.

This is precisely what happened in the case of GAIL, Sinha told the press, at the Economic Editors’ Conference today. No one can predict what the market price is the best, he argued. Six months ago, the government tried to sell GAIL shares in the local market and got only Rs 66 at that time. And as for selling GAIL’s shares to its competitors like Enron and British Gas, Sinha said since the shares are openly traded, they could have bought them anytime anyway. And yes, it was because on Enron and British Gas that the government got an offer of Rs 70 — the previous best was Rs 65. The fact that Enron and British Gas have chosen to repose their faith in Gail, Sinha said oblivious of how it may sound to the swadeshi brigade, is something which should make India feel proud!

Sinha also chose to defend his colleague Kumaramangalam’s statement yesterday that the state-owned NTPC would be buying another state-owned company NHPC for Rs 4,500 crore, and that this money would be used to bridge the budget deficit. “This is not the same as cross-holdings”, Sinha replied to a query as to whether this was not unfair, and similar to the method used last year when the government got oil companies to buy each other’s shares. Sinha chose not to reply to the question as to whether it was unfair, and whether this was genuine disinvestment. In response to a supplementary question, Sinha chose to say, “Why is it a sin to balance the budget?” Absolutely, but so what if this was not the question being asked.

Sinha, of course, hadn’t finished with Chidambaram as yet. In response to another question as to whether foreign firms could actually acquire more than a 26 per cent stake in private insurance firms once the sector opens up, Sinha said they could “if I had left the matter vague like Chidambaram did in his bill.” Ouch!

Sinha also chose to deny, very unconvincingly, a newspaper report that the finance ministry had deferred a decision on setting up a Road Fund from the one rupee cess it was collecting from petrol and diesel — the amount that will be collected this year is an estimated Rs 5,800 crore. Sinha said that the government could not set up a fund unless it was passed by Parliament, but refused to say if the government was even moving such a law. Let the road ministry come up with viable projects and we’ll fund them, he said. Never mind that in his budget speech, Sinha himself had said that half the diesel cess would be transferred to a Central Road Fund.