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Divestment or Asset Garnering

The government’s divestment drive has an unimpressive goal

What do you think of the increased equity participation in public sector undertakings (PSUs)?

PSUs are in a very unusual situation because India does not have a disinvestment programme of the kind which would make a difference to them. This is proving to be an asset gathering exercise for the government to bridge the fiscal deficit, which is a fairly unimpressive objective of the government from the market’s perspective.

Some 64 US banks have collapsed this year. What are the likely repercussions on our stock markets? Also, the State Bank of India once again posted a record net profit. It seems our economy is to a great extent insulated from the US economy.

We have already seen the repercussions on our stock markets. There was a complete aversion towards risk during the October 2008 fall. I don’t think it is as alarming as it was then and investors were unable to reconcile with the reality. Now, these collapses are not having as much impact on markets because the risk tolerance, or reconciliation, with the prevailing uncertainty is much higher.

Surely, our banking system is far more robust and this is something which has been globally acknowledged. I think our bank regulator acted tough. It restricted many of the practices which were implemented globally and we have reasons to feel very pleased with the whole situation and we have a great learning from the whole experience that the world went through.

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