Privatization plans bump along apace
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Privatization plans bump along apace

Privatization in India has accelerated under firm government leadership but the process has been complicated by doubts about the involvement of state companies as buyers and government provisions to prevent monopolies developing. Foreign buyers have been notably absent, not least because of restrictions on the size of their holdings and other government provisions. Looming in the background is also the threat of a growing populist political tendency.

Arun Shourie

Arun Shourie, India's minister for disinvestment, faced a verbal barrage in parliament a year ago when he announced the sale of a 51% stake in Balco, a profitable aluminium company, to Indian company Sterlite.

The opposition Congress Party alleged that Balco had been sold for a song and its workers went on strike, forcing a plant closure. A combative Shourie offered to annul the sale if Congress could find a buyer willing to pay more. It was many weeks later, after the Supreme Court upheld the sale, that the new owners of Balco, now saddled with a Rs2 billion ($41 million) loss, were able to move in.

On February 5 this year Shourie announced the sale of two big state companies - VSNL, a telecoms company whose monopoly over international telephony ends in April, to the Tata group; and Indo-British Petroleum (IBP), an oil-marketing company, to state-owned Indian Oil Corporation (IOC), India's only Fortune 500 company.

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