December 10, 2018

Peter buys PSU, pays Paul to plug deficit

Visiting Senior Fellow Shankkar Aiyar writes in The New Indian Express on a paradoxical practice plaguing public finance management in India today.


"The modus operandi is simple—locate a government-owned enterprise and direct/force it to buy the government’s stake in another government-owned enterprise and pay the government—Peter buys PSU, pays Paul to plug the hole. The process delivers a corollary—the government can sell an enterprise and continue to own it.


Consider the latest transaction—if it can be called that. On Thursday, the government informed that public sector Power Finance Corporation would be buying the government’s 52.63 per cent stake in public sector Rural Electrification Corporation and pay the government the value realised, which is estimated to be between Rs 12,000 crore and Rs 15,000 crore."


Read the whole article here.

Topic : State Capacity / In : OP-EDS
Tags : finance
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