The Rocky Path To Privatisation

With just ₹9,329.9 crore mopped up against a disinvestment target of ₹1.75 lakh crore for FY22 and with just two months to go, the government’s ambitious attempt is likely to come a cropper. What could salvage the situation for now, and how can it execute better in future?

- Manish Pant

TWENTY YEARS is a long time. That’s what it took to execute the privatisation of Air India. The process was set in motion in year 2000, albeit the idea for selling it was first proposed in 1988, following the successful sell off of British Airways and other national assets by the Margaret Thatcher government in the UK. “Air India was the Holy Grail of public sector privatisation. The sentiment in the government was, ‘If we can successfully privatise Air India, we can sell anything.’ Now that it’s done, it’s up to them to leverage it,” a market source told Business Today requesting anonymity. The sale of Air India is to fetch the government ₹18,000 crores, and would give the buyer, Tata group, ownership of Air India, its low-cost unit Air India Express, and a 50 per cent stake in the airline’s ground and cargo handling subsidiary, Air India SATS Airport Services (AISATS).

Privatisation is a multi-layered, complex process. The dos and don’ts from the Air India experience might well serve as a template for future such deals. And the government sorely needs the template. Consider this. ₹1.75 lakh crore is the revenue target through privatisation in fiscal 2021-22. (That would include both privatisation and disinvestment.) However, the target looks far off, with only ₹9,329.9 crore in the bag so far (see Far from Target), and only two months left in the fiscal. Add to that the fact that these days, asset monetisation, disinvestment and privatisation are often used interchangeably. (The government is looking at raising ₹6 lakh crore through asset monetisation alone.)