When ownership is with the president of India, and control is with an operating ministry, the lack of alignment between ownership and control is a given. There is nothing new in it. If you go back in time and look at how operating ministries took decisions in PSUs, it will be self-evident. They never really acted in the interest of the owners or the controlling shareholders. This has been the story of every PSU.

The way out of this never-ending problem is simple. The government, the controlling shareholders must gradually cede control of these companies to private shareholders and release these companies from the hegemony of the ministry. This would be beneficial for everybody. The IRCTC episode is a mere reinforcement of what the solution is. In fact, it is time we move faster to a lasting solution for all shareholders.

Thankfully the government seems well-positioned in that direction. Selling a stake or ceding control while retaining a stake will release these companies from ministry control. This would certainly lead to the creation of shareholder value. This template has worked during the disinvestment phase between 2002-2004. This template should be carried forward by the government in the coming years. That is the only way we can avoid the recurrence of disastrous episodes where control clashes with ownership interest.

The IRCTC episode probably happened for a good reason. It exposed why ministries are not capable of acting in the interest of PSUs.

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