It has become almost fashionable to decry the role of the public sector in developing the nation, in the times of liberalisation and reform that we live in. But India´s public sector, though saddled with a few ageing behemoths and lumbering white elephants, has a few battle-scarred organisations which have managed to hold their own through thick and thin. And these companies are sitting on a huge cash pile (more than Rs 2 lakh crore, according to recent estimates).
That´s the monetary arsenal that the government has with it to kick-start the growth engine of the economy. And if you take into account the prime real-estate that a few public sector units have at their disposal, the kitty looks very promising indeed. I will spare you the specifics as the Cover Story has gone over this issue with a fine-tooth comb. As the finance ministry stares at a massive deficit of Rs 1 lakh crore, its options are limited in terms of kick starting the economy by infusing some public spending.
Time and again governments in the past have missed the bus as regards raising funds through divestment of PSU shares. The new government is nowhere close to meeting its Rs 43,425 crore divestment target for the current financial year, either. The biggest danger is that the stock markets, which had been buoyant for almost the entire duration that the current government has been in power, are facing some extremely rough weather thanks to oil prices going into a freefall and dangers that Greece might exit the euro-zone, triggering an EU Crisis 2.0. India had been relatively insulated from the crisis so far. The ebullient domestic stock markets have reflected the sentiments of global investors who are still bullish on the India growth story.
But if Athens sparks off a full-blown EU crisis, much of the money will be pulled out from emerging economies like India and find its way to the US, which appears to be a relatively safe haven, given the world´s largest economy´s performance over the past few quarters.
If this money dries up, the markets will have no appetite for whatever the Centre puts up for sale. As I have indicated in my earlier writings, the government should not miss the divestment bus as the earlier dispensation infamously did. The time to act is now.
There are a lot of silver linings on the horizon, though. For example, we are one of the few entities relentlessly looking at transforming the PM´s vision for transforming India´s urban landscape, into ground reality. Our roundtable on smart cities, the second one in the series, came up with some concrete suggestions on what can be done in the Indian context. There´s much more that we have got lined up in the coming months, and I look forward to your participation in these initiatives. So we enter the New Year with caution, infused with a liberal dose of optimism. Thanks for being a part of the journey so far and stay on board for the exciting times ahead.