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Criticism scares PSU bidders away: Shourie

The government on Friday warned that 'avalanche' of allegations against potential buyers of public sector undertakings was scaring them away and this had led international credit agencies to downgrade India as an investment destination.

"A factor that seems to be scaring away bidders is the din, and the avalanche of allegations that descend on parties once it becomes known that they are in the race for a PSU," Divestment Minister Arun Shourie told the Rajya Sabha.

Given the sort of charges, which have come to be hurled on some of the potential bidders, many are concluding that by staying in the race they would only be persisting needlessly in a minefield, he said making a statement on PSU divestment.

Such developments are among principal factors that have led international rating agencies to downgrade India as an investment destination, he said referring to widespread criticism against divestment process, which was making PSU sale difficult.

Shourie said more and more potential bidders were concluding that the condition of the enterprises was worse than they had assumed.

"The representative of a very important potential bidder for a flagship PSU eventually told me, Mr Minister, we are not able to see why we should pay you to take over your headaches," he said.

Moreover, given the atmosphere, which has come about, the bidders have come to conclude that it would be much more difficult for them to turn the enterprise around than they had thought, Shourie said.

But he asserted that the government remained committed to divestment.

"We continue to believe that this is the one way to safeguard jobs in these enterprises, and the enterprises themselves," he said appealing to the members to help create the atmosphere, which will maximise the number of bidders in each transaction to ensure this reform process proceeds apace.

Shourie said the government continued to believe that swift implementation of the decisions taken by the Cabinet Committee on Divestment was the one way to restore these PSUs health and to protect the jobs of workers and other employees.

The two strategic sales that have been conducted bore testimony to this, he said adding in Modern Foods, bread sales in 2000-01 were 31 per cent higher than they were the previous year.

In the first four months of 2001, they have been 80 per cent higher than they were in the corresponding period in 2000. Wages have increased on an average by Rs 1600 per employee per month, he said.

In Balco, a 67-day strike by workers caused a staggering loss and damage to the production units, Shourie said adding since the strike was called off, the new management has made every effort to increase production and restore normalcy in operations.

"The plant is getting renovated and interest of employees are well protected," he said claiming the first signs of a new work culture were visible.

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