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Fernandes set to fire fresh salvo on sell-off

Aditi Phadnis in New Delhi

Defence Minister George Fernandes is preparing a position paper for Prime Minister Atal Bihari Vajpayee, which he will hand over after the prime minister returns from Cambodia and Laos later this week.

Fernandes' move assumes greater significance as, bowing to political pressure, the government announced a day earlier that it was deferring the sell-off of aluminium major, Nalco owing to "internal wrangling in the National Democratic Alliance".

The paper will follow two letters Fernandes had written earlier to the prime minister, warning that divestment, if not addressed, could represent a serious political challenge to the NDA government. The debate on divestment was kicked off following the Fernandes initiative.

The position paper will explain what Fernandes' views on divestment are and seek to put the process in political perspective.

Fernandes is reportedly irritated at his views repeatedly being misinterpreted, both by economic fundamentalists within his party and in the government.

He believes an open discussion on divestment will help clear apprehensions that are being exploited politically.

The theme of "selling the country" arose repeatedly at the Samata Party's national council meeting at Rajkot a week ago.

Speakers argued that divestment must be opposed because it meant giving away public money to the private sector.

Countering this, Fernandes said at Rajkot that the situation was quite to the contrary - India was being crushed by a total debt servicing burden of around Rs 15.5 lakh crore.

If there was anything curtailing the sovereignty of the Indian people, it was the interest India was having to pay on its debt.

Divestment, he had argued, would create liquidity and would help India wipe out at least a part of this debt.

Fernandes also told his party that profitable public sector units were examples of India's success at economic reforms, so before these were sold, they needed to be made more profitable by injecting funds and managerial expertise, so that they got the price they deserved.

Fernandes is likely to make two main points in his position paper: first, that the report of the Divestment Commission be followed as the sell-off roadmap; two, that the government have a full and transparent discussion on a matter that goes beyond economic reform and can have a political spillover.

Fernandes is likely to cite the controversy over Nalco to illustrate the imperative of political management of divestment.

When Orissa chief minister Naveen Patnaik was in Delhi to explain his difficulties to the prime minister, he also met Fernandes, who told him that the people of Orissa needed to be told that the money from the sale of Nalco would be ploughed back to create better living standards for them.

An additional fee could be levied on the buyers, which could create a fund for Orissa in a revenue-sharing arrangement between the Centre and the state, Fernandes suggested.

He tried to dissuade Patnaik from being press-ganged into opposing the divestment of Nalco, which would mean the Biju Janata Dal would become a hostage to the politics of the Congress.

However, Patnaik is reported to have said he was helpless in the face of the turn the agitation in Orissa had taken.

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