Erring NITI

The Hindu on page 15 carries a news report from Press Trust of India- “Centre clears 26% strategic sale in BEML”. Times of India on page 27 carries a news report procured from agencies-“Govt clears sale of 26% in defence co BEML” (7 January 2017). They inform that out of government’s holding of 54.03%, 26% stake will be sold. And this might fetch Rs. 10 billion. But hang on isn’t BEML catering to Indian defence sector and is indeed a profitable company? Just to remind, according to Disinvestment Commission, government stake in BEML cannot be diluted, in national interest. Read below:

2.8 Strategic Group

At present as per the policy statements of Government, only four industries viz (i) arms and ammunitions and the allied items of defence equipment, defence aircrafts and warships (ii) atomic energy (iii) minerals specified in the schedule to Atomic Energy (Control of Production & use) Order 1953, and (iv) railway transport are the exclusive preserve of the public sector. A persual of the above list would imply that these industries are important from the national interest angle. Thus, it may be more appropriate to term these four industries as “Strategic”. The question of disinvestment in such industries does not arise.”
(Disinvestment Commission Report. 1997 pg 17).

NITI Aayog who has recommended sale of BEML has gone against the Disinvestment Commission Report.

Further BEML & other public sector undertakings have been identified by NITI Aayog for “sale of government’s majority stake to private companies in order to bring greater efficiency and professionalism”. It seems NITI Aayog sees privatisation as another word for efficacy and professionalism, though there is no direction relation between them. Ownership per se has nothing to do with efficiency & professionalism. There are certain other attributes that make an organization, in Peter & Waterman’s terms- an ‘excellent organization‘. NITI Aayog lacks understanding of organizational behaviour. Unfortunately, Hindu, Times of India did not critically analyse this decision, but just carried the agency report.