You've got to grant it to Palaniappan Chidambaram. The man has the patience of a teacher in a correctional facility and the quiet resolve of a missionary. Which is why, despite opposition from his United Progressive Alliance (UPA) government's Left partners to sale of public sector enterprises, the Finance Minister has managed to make some progress. The last big disinvestment deal happened in October last year, when the government sold 10.5 per cent in India's biggest power generating company, the National Thermal Power Corporation. The issue was oversubscribed 10 times and swelled the government's kitty by more than Rs 4,000 crore.

Since then, things had been quiet. But Chidambaram, it seems, had been at work. On May 26, he announced that the government would sell a further 10 per cent stake in the state-owned power equipment giant Bharat Heavy Electricals. The announcement of the sale, which will reduce the government's holding to 57.72 per cent and raise an estimated Rs 2,000 crore, pushed BHEL's stock to a 52-week high of Rs 918. Besides BHEL, the government plans to sell 15 per cent in the Shipping Corporation of India, where it owns more than 80 per cent of the equity. Others on the list are the two power sector companies-Power Grid Corporation and the Power Finance Corporation-although just how much the government plans to sell in them hasn't been disclosed. The national carriers, Air-India and Indian Airlines, may also be floated. Tenders inviting sale advisors have already been put out, and the last date for response is June 17. Bravely enough, there's also talk of divesting the government's residual share holdings of 18 per cent and 44 per cent in, respectively, Maruti Udyog and Bharat Aluminium Company (Balco). If Chidambaram has it his way, disinvestment will fetch the government as much as Rs 7,000 crore this fiscal.

The question, however, is whether Chidambaram will have it his way. Ever since the Congress-led UPA came to power more than a year ago, disinvestment has taken a hit. That's no accident. Because the UPA coalition was formed with support from the Left Front (a group of Communist parties led by CPI-M), the government's to-do list, dubbed the Common Minimum Programme, promised not to sell profitable PSUs. The calculation probably was that the reforms' original "Dream Team", comprising, among others, Prime Minister Manmohan Singh and Chidambaram, would be able to have its way with the coalition partners. A resurgent Left Front (CPI-M alone gained 10 more seats in last year's general elections), however, has proved to be a tough nut to crack. Almost all disinvestment proposals have run into a solid Left wall, despite the government assuring that a substantial part of the proceeds would be put into a National Investment Fund aimed at social sector development such as providing drinking water and building roads in rural India.

So how much of PSU sale should you expect in the next three quarters? Certainly not a whole lot, and with the UPA going on a witch-hunt over the sale of Centaur hotel (the one near Mumbai airport) under the previous BJP-led government, strategic sales (involving sale to a private sector company) can be almost ruled out. That means the only option available to the government is sale of shares to the public. Is the primary market deep enough to absorb a slew of offerings? That would depend on two things: One, the nature of the offer and, two, the timing of the offer. If the government lives up to its promise of not selling profitable PSUs, then don't expect the investor to get excited; such units are best sold to a strategic investor who can buy it at a bargain and then turn it around. But that's unlikely to be allowed by coalition partners who, shockingly enough, want the government to actually invest in sick PSUs in an effort to revive them. As for the stock market outlook, things look pretty good as of now. The Sensex is edging closer to the 7,000 mark. In any case, the market promises to stay buoyant at least until the end of this calendar year. Which means good quality IPOs like BHEL's would find an eager market. Says Prithvi Haldea, Managing Director of Prime Database, which tracks IPOs: "As long as it is just a just a trickle (of PSU equity into the primary market), the Left will agree-even if reluctantly." Chidambaram's strategy, then, will have to be simple: Keep hammering at it till the Left gives in.

-Ashish Gupta

SECOND
Reinventing The MSEB
Unbundling of the Maharashtra State Electricity Board is a step in the right direction. What's required next is its privatisation.

Unbundled: Can we now expect better efficiencies?

Effective first week of June, the Maharashtra State Electricity Board (MSEB), the state's sole supplier of electricity (barring a few urban centres that have private participants) will run as four separate state-owned entities: the MSEB Holding Company, the Maharashtra Power Generation Company, Maharashtra State Transmission Company, and Maharashtra Power Distribution Company. This is in keeping with the overall agenda of power reforms in the country as outlined in the Electricity Act of 2003, which envisages the division of State Electricity Boards (SEBs) into separate companies for transmission, distribution and generation to bring in better efficiencies in the sector.

The unbundling of MSEB, as the division of the board has come to be known, will see the MSEB move from a relatively independent status to one where it comes directly under the control of the state Energy Ministry with the Energy Minister as Chairman of the MSEB Holding Company. It's a move that has raised eyebrows. "The government obviously wants more control. Why else would the energy minister want the chairman's position? We need qualified people for these posts," says A.D. Golandaz, CPI member and Secretary, All India Federation of Electricity Employees.

"We had made certain demands (to the government) on details of valuation and appointments among others. Any company ought to follow performance benchmarks or it lends itself to political appointments," says Girish Sant, an energy expert with the Pune-based NGO, Prayas. State Energy Minister Dilip Walse Patil dismisses these claims. "The holding company (which he now chairs) does not get into actual operations; we are only involved in planning, and there is a mechanism in place for appointments and eligibility criteria have been specified."

What the opponents of the MSEB restructuring fear is its eventual privatisation, which they say will lead to an increase in power tariffs like in Orissa and up. While Energy Minister Patil denies that the state has any such plans, the point is privatisation is urgently needed in the electricity sector. mseb's own unbundling was effected ahead of the June-end deadline because of its worsening performance. Once one of the best-managed state electricity boards, MSEB has become a doddering giant, unable to keep pace with the state's electicity requirements. Currently, there's an estimated shortfall of 2,986 mw (in the evenings) in the state, with even Mumbai, India's commercial capital, witnessing outages. The situation is much worse in rural Maharashtra.

No doubt privatisation in Orissa and up led to snafus. For instance, in Orissa, privatisation sceptics argue, state monopoly has been replaced by private sector monopoly, where distribution is controlled by Reliance Energy (formerly bses) in three-fourths of the state, and generation and distribution in the central region is dominated by AEs of America. That may be the case, but citing that as an example to argue against privatisation of the sector elsewhere hardly helps. What the SEBs really need is a better model of privatisation, where consumers are able to buy reliable power at reasonable prices.

Not privatising, and hence not introducing efficiency into the system, would mean a national disaster. Already, according to the Electricity Act of 2003, only 55 per cent of the households in the country have access to electricity; the financial health of the SEBs is deteriorating because of rampant power theft and systemic inefficiencies, with their annual losses amounting to more than Rs 33,000 crore. If India has to keep its economic engine humming, then it needs more and better quality power. If privatisation is the only way to get it, so be it.

-By Priya Srinivasan

NICHE
Filling A Gap

Now in India: Sibal (left) with Purie at the launch

It is 160 years old, boasts five million readers worldwide, and counts more than 120 Nobel Laureates among its past and present contributors. Now, Scientific American will publish out of India, courtesy the India Today Group, which also publishes Business Today. On June 6, Editor-in-Chief of the group, Aroon Purie, handed over a copy of the first issue to Kapil Sibal, Minister of State for Science, Technology and Ocean Development. Speaking on the occasion, Purie noted that while India had "one of the largest pools of talent in the world... there has never been a magazine of international repute devoted to science and technology and published from India. By bringing out Scientific American India, we hope to fill this void". The minister added that the magazine offered a tremendous opportunity to Indian scientists to get their writings read worldwide. In a special message published in the inaugural issue, President A.P.J Abdul Kalam said that "the magazine will help in taking the discoveries in science to the common man". If the magazine does well, Purie said, the group could consider launching Scientific American India in Hindi.

-Charudutta Jena

Q&A
NACO & Its Numbers
Who's winning: NACO or HIV?

Blindingly obvious: The AIDS epidemic is staring India in the face

If what the director general of the Delhi-based national aids Control Organisation (NACO) says is true, then we have a potential Nobel Prize winner in him. According to S.Y. Quraishi, the man who heads NACO, his organisation may have pulled off a near miracle. Last year, NACO says, there were only 28,000 new cases of HIV (human immunodeficiency virus that causes aids) in the country, compared to a staggering 520,000 reported the year before. Either thousands of cases are going unreported or NACO has done an outstanding job. Quraishi, not suprisingly, believes the latter is the case. "Our strategies have worked," he boasts, adding for good measure that "it doesn't mean we should be complacent."

NGOs are dumbfounded by NACO's claims. "We don't know how NACO arrived at this figure," says Ryan Fernandes of the Delhi-based Sahara, which runs 36 projects for HIV-positive people across four states. "We are coming across new HIV-positive cases almost every day. While we do hope the numbers are right, it's unlikely that the government and ngo-run programmes could have made such a big difference in just one year," he adds. For the record, NACO says that it used the same criteria and sample to arrive at last year's numbers.

Despite NACO's apparent optimism, the fact is that the HIV disease has reached epidemic proportions in the country. Between 1986, when the first case was reported, and now, the number has soared to more than five million. It's not just a healthcare crisis, but an economic one too. According to an ADB-UNAIDS report, the loss due to HIV/AIDS in Asia-Pacific was estimated at $7.3 billion or Rs 35,040 crore in 2001. If the trend continues, the figure will be $17 billion or Rs 74,800 crore by 2010. And in India, which has the largest number of HIV cases after South Africa, the economic loss could be as much as $5 billion or Rs 22,000 crore this year alone. According to the American Enterprise Institute, by 2025 the disease could cut annual economic growth in India by 40 per cent. It's time NACO re-looked at its numbers.

-Swati Prasad

VOX-MASTER
'Saharashri' Speaks

All's well: Roy with wife Sapna

Bringing the rumour mills to a grinding halt, Sahara Group supremo Subrata Roy made a spectacular public appearance a day before his birthday on June 10 on his Sahara channels to kill rumours about his ill health. In an emotional speech, Roy said that he was coming "in front of you... with an insignificant matter of my health". Stating, much like Mark Twain, that the rumours of his death were greatly exaggerated, Roy, 58, pinned the blame on "some narrow, nasty-minded people", who, he added, "do not realise that their irresponsible actions give a severe blow to the country's economy, progress and prosperity". He went on to blame his exhaustion and consequent absence from public life to his punishing work schedules. "In the last 28 years, I haven't, on an average, slept for more than 3-4 hours (a day)," he said. The result, he said, was a rise in blood pressure, following which his doctors had advised "maximum rest". Recently, though, "my doctor friends examined my body in every conceivable manner, from head to toe... and found (me) to be absolutely disease-free". In fact, the group issued a medical certificate from his doctors stating as much. While Roy, in his speech, did not specify his proposed work schedule, he did say that his priority was to "make myself more fit through natural means so that I am able to contribute to the development of our organisation and country".

-Kumarkaushalam

NEBULOUS
Monsoon Models

C-MMACS' Pratap: Working on it

Predicting the arrival of the monsoon isn't the easiest of businesses. The Indian Meteorological Department (the Met) and four or five other institutes, including the Pune-based Indian Institute of Tropical Meteorology, do that twice a year, not always with great success. For the last two years, the Bangalore-based Centre for Mathematical Modelling and Computer Simulation (C-MMACS), part of the Council of Scientific & Industrial Research, has been experimenting with a new dynamic model called the Atmospheric General Circulation Model (AGCM) to better predict the monsoon. What's different? In contrast to the Met's model, which relies on empirical rain and climate data, C-MMACS uses real-time data. For this year, it had forecast below normal rains. (The Met, in contrast, had predicted a high probability, of 75 per cent, of normal monsoon this year.) The Sensex promptly fell 70 points on C-MMACS' forecast of June 3, but recovered when rains hit Kerala on time on June 5. C-MMACS' Scientist-in-Charge, Gagan Prathap, admits that their model isn't flawless, but adds that its long-term potential is very promising, and will allow policy makers and even farmers to better work out their monsoon strategies (paddy or millets). There's a proposal now to pool resources with the other Indian agencies and develop one composite technique that's, hopefully, more accurate. We are waiting.

-Rahul Sachitanand