Maruti sell-off skids; Joshi says, No, not yet

Maruti sell-off skids; Joshi says, No, not yet
ENS ECONOMIC BUREAU

NEW DELHI, NOVEMBER 19: Less than 24 hours after a Cabinet committee cleared the in-principle decision to sell off the government's under-50 per cent stake in auto-leader Maruti Udyog Limited, industry minister Manohar Joshi threw a spanner in the works, saying that nothing of the sort had been decided.

At an informal meeting of journalists arranged by his office, Joshi said today that an ``in-principle approval has not been given by the Cabinet for selling government stake in Maruti.'' ``The Cabinet has only decided to set up a committee of secretaries who will consult Suzuki on the various options available'', he added.

Joshi's statement, which runs completely contrary to the impression given by the disinvestment ministry yesterday, underscores the deep divide in the Cabinet on the issue of selling off the government stake in Maruti. It also puts the government on the defensive, on the eve of the winter session of Parliament, as it underscores major differences between key allies on the issue of privatisation of public sector units -- apart from the Congress, key BJP allies like the Shiv Sena, to which Joshi belongs, are expected to launch a broadside in Parliament on privatisation.

Joshi has been opposed to the sale for several months, and the last meeting of the Cabinet Committee on Disinvestment was even called off due to this. Yesterday's meet was an equally stormy one, with Joshi still asking for more time, but government spokespersons were quite emphatic that an in-principle decision to sell off Maruti had been taken.

While Joshi said that he did ``not think that there will be any difficulty in reaching a decision for disinvestment in Maruti Udyog'', he said today that a final decision on Maruti will be taken ``when the issue comes up for discussion at the next meeting of Cabinet Committee on Disinvestment (on December 23).''

Interestingly, and perhaps in a sign of the constantly evolving positions in the government, Disinvestment Secretary Pradip Baijal was a bit evasive today, and said that Joshi was partly-correct: ``It is true that decision on the Maruti sell-off would be taken only after talking to Suzuki.'' While saying that a beginning had been made, Baijal, however, emphasised that ``discussions can start only when there is a desire to sell.'' He added that ``it could also be possible that after exploring all the options the government may even decide not to sell its stake.''

Adding to the confusion, Joshi's ministry officials even pointed out that the committee of secretaries appointed to negotiate with Suzuki was unlikely to be able to take a decision quickly. Apart from the fact that the matter was a complex one, Industry Secretary T.S. Vijayaraghavan who is a member of the committee is due to retire in the next 10 days.

Indicating how tough road to selling off the Maruti stake will be, Joshi today told journalists today that there were various options being floated. The government could sell its stake to Suzuki, or to a third-party with Suzuki's consent, or even to Indian financial institutions or individual shareholders. The government, Joshi said, could even buy out Suzuki's entire stake, indicating that he preferred this alternative -- under this model, a 100-per cent stake in Maruti could then be sold off to some other buyer. The ministry of finance, however, is opposed to this model, as it wants privatisation proceeds to come to it, instead of being asked to pay money first with the promise of more coming in later.