The article criticizes government for its sector-centric view on the issue of FDI policy making.
The recent all-of-a-sudden FDI policy change announced by the government clearly reflects that these changes are driven by sectional interest rather then a long term commitment to liberalization. The recent credit crunch faced by some companies in specific sectors made it inevitable to liberalize norms for FDI investments. However, the policy has not been conceptualized properly which is very evident from the fact that government has not been able to answer several questions that have been asked by even the ardent supporters of FDI liberalization.
A FDI policy, irrespective of governments at the centre, has been favored to one or the other sector at different times. Initially domestic telecom operators were given protection with strict FDI norms which were later liberalized on the insistence of the same telecom operators. Same was done for civil aviation and insurance. The problem is that policy issues, when succumbs to sectional interests, produces sub-optimal results. It may be helpful at micro-level but proves irrational at macro-level.
The article praises SEBI for relaxing the Substantial Acquisition of Shares and Takeovers Regulations for the companies where the board has been superseded by govt or regulators.
The decision would be good for it would give distressed companies a chance to continue as going concerns. Also the decision would end the criticism that a special treatment is being given to Satyam Computer Services. The insistence on competitive bidding would help find the best buyer for SCS. The 26-week rule, for small investors seeking exit with management change, has been the major impediment for genuine suitor for companies that have witnessed stock fall in a short span of time. With new provisions, the open offer price would be based on current market conditions.
SEBI’s decision to restrict the relaxation to companies intervened by govt/regulators is again a good move as it would prevent abuse by buyers looking for a potentially good company cheap. With new rules, the govt appointed boards would have to act responsibly and wind up the task of finding a new management for distressed companies in a reasonable time. Satyam case should prove to be an example for future.
Quizzing the mirror
The article talks about the latest question running around the media, “Who’s the greatest Indian cricketer of them all?” and tries to find answers using different mirrors.
While the “records mirror” answers Sachin Tendulkar for a string of records he has on both formats of the game, the anti-Sachin lobby goes for “advanced records mirror” that says Rahul Dravid for his innumerable match-saving batting mostly in the forth innings, great innings specially abroad and runs scored in winning effort. However, the old generation talks about “quality mirror” which reflects Sunil Gavaskar for his fantastic batting at the time when there were no protection, uncovered pitches, best bowling attack etc. However, Gavaskar is often countered by “all round mirror” which portrays Kapil Dev as greatest of all for his batting, bowling, fielding and captaincy.
However, historians argue that to get the real picture, besides quality and numbers, one has to use “impact mirror” for some people by their actions, changed the course of the world we live in which reminds us Ranjitsinghji and C K Nayudu. However, all mirrors have their cracks and distortions and it is very difficult to say which one’s the best.
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