Friday, November 02, 2007

T.T. Ram Mohan has an idea for how to pay for the Pay Commission recommendations

In his latest column in the Economic Times on the rise and rise of stock prices, he says:

First, let us acknowledge that there is something to thank the Left for. When the Left announced its opposition to disinvestment after the UPA government came to power, the Sensex tanked. Critics of the Left yelled highway murder. This is the end of the rise in the Sensex, they said. We know now it was only the beginning.

The Sensex has risen nearly 300% since June 1, 2004. PSU stocks have outperformed the Sensex, rising by 366% in the same period. The market did not suffer because of the Left’s opposition to disinvestment and the government itself has gained hugely. Secondly, if the government is still around when the Pay Commission recommendations arrive, it can work out a deal with the unions and the Left: let us go with a generous award by all means but please allow disinvestment to proceed at least in PSUs where the government’s shareholding is well above 51%.