NEW DELHI: Shares of state-run companies, badly battered in the last one month on privatisation jitters, also rallied in the intra-day trade Thursday on hopes that the stalled privatisation program could be back on rail. Captains of industry, however, feel that the avalanche of criticism heaped on the government's privatization process by India's most influential Hindu rightwing group and some central ministers may derail the country's economy. "The prime minister's observation has very clearly indicated that there is no going back on the disinvestment process, only the modalities of sale have to be debated," a spokesperson for the Confederation of Indian Industry (CII) said. Vajpayee came out strongly here Wednesday to the rescue of beleaguered Disinvestment Minister Arun Shourie, asserting that the privatization process would continue despite scathing attacks on it. An unusually combative Vajpayee made a strong defense of divestment and reform process, rebutting the argument that disinvestment created joblessness and distress sale of state-run companies. "An anti-reform atmosphere is being created in the country. This is not in the interest of the country." Vajpayee also slammed critics who have alleged that privatization amounted to selling India's vital assets. "Even educated, intelligent people are saying that the present government is selling everything. It has sold India. India is not so cheap." His remarks came against a background of meetings through the day Wednesday that presented, most clearly, a fractured face of the government's approach to a free economy. Experts say Vajpayee's remarks possibly marks the boldest-ever defense of India's on-again-off-again privatization process by a prime minister since the country embraced sweeping economic changes in 1991. "Vajpayee is backing Shourie. At the same time, he wants to assert his authority over some affiliates of his Bharatiya Janta Party (BJP)," said political commentator Prem Shankar Jha. The BJP heads India's multi-party coalition. "His remark on economic reforms is bit of an admonishing to cabinet colleagues who are publicly questioning the government's economic policies. But I don't think it is going to work... Silencing the anti-reforms lobby won't be an easy task." Vajpayee's riposte came hours after Defence Minister George Fernandes, Petroleum Minister Ram Naik and Human Resource Development Minister Murli Manohar Joshi met to plan their moves against the sale of blue-chip state-owned companies. Less than a month ago too, Naik, together with Fernandes and Joshi, forced through a three-month delay on selling stakes in state-run oil majors Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL). The move triggered a sell-off of shares in the two companies, driving their market value down by over 30 percent. But the slide has not perturbed Naik, who wants a debate over the security implications of the sell-off. Disinvestment Minister Shourie, however, argued that the privatisation programme had significantly influenced market sentiment. In an apparent climbdown, Shourie admitted that privatisation was a political issue and said it was for the prime minister and Deputy Prime Minister L.K. Advani to address the criticism against the drive. The Associated Chambers of Commerce and Industry of India (Assocham) said Vajpayee's "categorical assertion on the irreversibility of reforms" would sent a clear message to the potential investors. "The government also needs to erase the perception that its policies related to foreign investment lacks transparency and continuity," said the industry lobby. "These are often seen as consistent with building India's image as an investor-friendly destination." The most bitter attack on Shourie and foreign investment policies of the government has come from the BJP's ideological mentor, the Rashtriya Swayamsevak Sangh (RSS). RSS chief K.S. Sudarshan said the economic policies being pursued "at the behest of the WTO and the IMF" were "urban-based, high energy consumptive, capital intensive, labour displacing and ecologically destructive. "Those supporting foreign models of development should be removed forthwith," he said, in an obvious reference to Shourie.
Source: IANS