Here again the issue relates not to the merits of the case, which the investigation must decide. Rather, it relates to the timing. Kumar was given unusual powers during a time when VSNL had been restructuring its operations in keeping with decisions being implemented as part of the government's ever-changing telecom policy. Even after the appointment of a new Managing Director to the corporation that had remained formally headless for a long period of time, Kumar's presence and influence was obvious. The fact that the government gave him the importance it did, and then decided to force his exit at a critical juncture is bound to raise questions.
 
All this matters because the crucial question is how the government is likely to value these corporations when assessing the bids made by those seeking a "strategic stake", or full control in lieu of a small share in equity, in them. Further, it is not just how that stake is valued that is at issue, but the way in the shareholders' agreement, which would define the powers of the strategic investor, is drafted.
 
It is not clear how these would be affected by the recent actions against Mascarenhas, Kumar and others. Rumour has it that V.N. Verma, who was displaced by Mascarenhas from his position as commercial director Air India, and has been reinstated in the wake of the latter's suspension, had views that were "anti-disinvestment" and in keeping with those held by Civil Aviation minister Sharad Yadav. But Mascarenhas himself claims that the government's decision to sign a number of bilateral deals granting reciprocal landing rights and hawking Air India's unutilised rights to earn revenues, rather than leasing aircraft to use those rights, was a way of undermining Air India's share value.
 
The decision to enter into codeshare, block space and pool arrangements and other commercial agreements have reportedly yielded Air India Rs. 257 crore in 2000-01. But this temporary gain in revenues is also a reflection of the failure of the airline to exploit rights which others find lucrative enough to buy in exchange for a significant sum of money. This gain or loss, depending on how one looks at it, is accompanied by the growing presence of other airlines in what was substantially Air India's territory. Thus, the policy, which serves as a soft option in lieu of investments that would enhance the airline's profitable assets, does adversely affect the long run earnings profile of the organisation. The net impact on the corporation's value may indeed be negative, as Dr. Singh suggests.
 
Similar suspicions with regard to how government actions affect share valuation prevail in the case of VSNL as well, where the issue is even more complex. The premature termination of VSNL's international telephony monopoly next year is expected to adversely affect the corporations value, even though it is to be compensated in cash as well as concessions regarding payment of entry fee and provision of bank guarantee for entry into long distance telephony. The decision on what should be done with the Rs. 4000-odd crore cash surplus that the company has accumulated because it has not invested fast enough, would definitely make a difference. And the mess surrounding Amitabh Kumar's forced and ill-timed exit may also, in myriad ways, have its effect.
 
There are three ways in which the issue of valuation is approached by the government. In instances like VSNL, the prevailing price of previously disinvested shares provides some benchmark. The incomes being earned by the company, which are extrapolated and discounted provides a second yardstick, as happened in the case of BALCO. And finally, an independent valuation of the worth of the tangible and intangible assets of the company ostensibly provides a third indicator.
 
The problem is that the shallow and volatile nature of the stock market makes the first a completely useless guide. The second has been undermined by the government's refusal to allow these firms to exploit the opportunities they had of earning long run profits, partly because of bureaucratisation and disputes over turf, and partly on the grounds that they were candidates for disinvestment. The likely value yielded by the third has been undermined in various ways, as the current controversy, and that surrounding BALCO earlier, suggests.
 
There are many factours favouring Dr. Manmohan Singh in the current controversy. He has an image of a person who, besides being ‘clean' himself , would not publicly defend the corrupt. He is no opponent of liberalisation and disinvestment, having launched India's accelerated ‘reform' programme of the 1990s. He has the training and experience to judge issues of the kind that are under debate. Hence his opposition to the manner in which disinvestment is being pursued is likely to carry much weight. Further, since it signals the decision of Congress to oppose, at least in part, the irrational disinvestment drive launched by the NDA, it is likely to be effective.
 
Yet, what is good can be made better. How much better it would be if he combined this opposition with a campaign to restructure these potentially lucrative corporations, retain them in the public sector and make them yield much-needed non-tax revenues for the State. Just stalling the pace of disinvestment or merely influencing the price at which it occurs would hardly win the battle.