Can a new India be created by disinvestment: Experts debate
Published on Sat, Jul 04, 2009 at 20:40 | Source : CNBC-TV18
Updated at Mon, Jul 06, 2009 at 12:27
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Can a new India be created by disinvestment: Experts debate
Whatever the queen is selling, you should be buying it. That was Peter Lynch’s way of informing investors that good gains could be made through privatisation. Here is a 360 degree perspective on what India’s disinvestment programme is looking like.
Q: What is your favourite disinvestment success story globally?
Shah: I think the most interesting disinvestment story was in East Germany. After the fall of communism, all the public sector companies of East Germany were sold off within a period of roughly six months. Negative bids were permitted because a lot of those companies were actually a problem to take on and the private sector in West Germany completely took over the public sector of East Germany. So that Germany today is a market economy.
Q: Which according to you was the most successful programme?
Baijal: I agree with what Mr. Shah said. But to me the ideal example is also Russia. They sold their public sector shares very cheap because perhaps the government realised that that was the only way this was possible. They made huge losses in those shares and there was a lot of dissatisfaction because of selling cheap and there were a lot of agitations as well because the shares were sold cheap to employees and to some people close to the government.
But then at the end of it all, today if you see the growth in Soviet Russia, it is much more than the growth say in India. So, you sell cheap and you profit later.
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