Briefly, Kelkar had proposed transferring of the Government equity above 49 per cent, to begin with to a new company called a Special Purpose Vehicle. With the Government equity down to 49 per cent, Kelkar had argued, these PSUs would be free of onerous controls such as those imposed by Parliament and the CAG and would therefore be free to operate as sound commercial enterprises. The SPV could, in turn, at a later date, sell the shares that it had of all these PSUs.

This proposal, Ramakrishna had then argued, however, was dangerous as it would put a lot of powers in the hands of the ministers and the bureaucrats who would be controlling these enterprises. After all, since theGovernment would still have 49 per cent share in the equity of these enterprises, the minister would then be free to do what he wanted in the enterprise.

And since these companies would no longer be PSUs, there would be none of the usual checks on the minister's such as Parliament of CAG while these checks are usually onerous, they also serve as a check on abuse of ministerial power.

The crux of the problem here was that the PSUs would not always have independent boards and that the Government would misuse its powers as the single-largest share-holder. So what Ramakrishna is now proposing is that the government transfer all its existing share-holding in these PSUs to a National Shareholding Trust whose members will be eminent persons such as the chairman of a leading PSU bank, the chief of a public sector unit insurance company, the Finance Secretary, the chief of the Disinvestment Commission and some eminent management expert. So with the Government no longer in a position to influence the running ofthese PSUs by virtue of its share-holding in them, presumably, they will be allowed to function independently. The Trust would then get a seat on the board of these companies, like all big shareholders do, and would act according to the interests of the companies rather than just as a nominee of the government.

The Trust, then, would essentially act as a buffer to protect against abuse of powers by the Government. Other than that, it would function exactly like Kelkar's SPV concept, and keep offloading the shares held by it from time to time. It would also, in some cases, go in for a strategic sale of equity, based on the recommendations of the Disinvestment Commission.

According to Ramakrishna's proposal, if the Government does this quickly, then it would still be possible to raise Rs 5,000 crore in the current year from disinvestment. It is an open question, of course, as to whether the government will accept the proposal. Transferring the entire government equity to a trust in which the Government willhave no power over is unlikely to be a very popular move.