The proposal to first split and then partially privatise Indian Oil Corporation, the largest oil company and the country's only representative on the prestigious Fortune 500 list, shows how comically desperate the disinvestment ministry can get. Its latest proposal-which seems more a knee-jerk reaction to the Supreme Court's ruling on the disinvestment of two other state-owned oil companies-calls for hiving off IOC's retailing business (read its 23,900 retail outlets across the country) and selling it to the private sector. In effect, it means the state-owned IOC will be left with a relatively unremunerative refining business. As with anything in business and economics, there are two ways of looking at it: from the winner's point of view and, of course, the loser's. Let's look at what the winner could get. A private sector buyer-like Reliance or Essar, which has big refining capacity without retailing outlets-gets a readymade network that is efficient and spans the entire length and breadth of the country. Nothing wrong with that except that there is another point of view.

In the event that the government goes ahead and splits the oil company, the residual IOC will be a 47.5-million tonne refiner without any retail outlets. Ironically, it will have to hawk its wares to the new owner of its erstwhile petrol pumps. And, as any casual observer knows, stand-alone refineries without downstream retailing do not make economic sense. So an erstwhile money-spinner would be transformed into a loser.

True, the proposal to split and sell IOC is, for the moment, just that, a proposal. And one that could be even tougher to implement than the disinvestment of HPCL and BPCL, the two oil companies where the government's sell-off was blocked by the apex court's ruling. Still, the move on IOC brings to the fore yet another instance of how the disinvestment process can get hijacked by both political as well as business lobbies.

Ever since September 2000, when the BJP-led NDA government seriously began the process of privatisation, there has been opposition from both within its own coalition as well as from outside. For the Left parties, privatisation has meant "selling family jewels'' at throwaway prices and thereby undermining the cause of the national sovereignty; for the RSS and the Swadeshi lobby, it has meant succumbing to the multinationals at the cost of domestic players; and, as for the Congress, which, incidentally, initiated the disinvestment process by selling shares in state-owned companies in a medley of lots, it seems to have flipped and flopped so many times on the issue that now no one really knows what its stance is on disinvestment.

But blaming politicians alone would not be fair. True, powerful ministers have done their bit to stymie the disnivestment process, but arguably more powerful business lobbies may have done worse. The sale of IPCL to Reliance has created an unassailable monopoly in petrochemicals (although, admittedly, IPCL's financial performance after the sale has improved). Elsewhere, the privatisation of a state-owned hotel in Mumbai was turned into a canny arbitrage opportunity by its new private sector buyer who made a neat profit by reselling it within months of acquiring it.

It is in the light of these that the alacrity with which the latest proposal on splitting and selling IOC's business has come forth seems alarming. Does privatisation or disinvestment mean selling assets indiscriminately-as it would be if IOC's retailing business is hived off? Or should it be a process that must lead to better management of the country's resources by ensuring assets are owned by those who can use it most productively? The answer should be a no-brainer.