Disinvestment not a forgotten word in 2009

Disinvestment not a forgotten word in 2009

2009 saw the government relaxing a rule to pump proceeds from disinvestment directly for social schemes mainly to reduce fiscal deficit. Free from the bickering of the Left parties, the UPA-, II came out with clear-cut policy on disinvestment, asking all profitable listed PSUs to have minimum public holding of 10 per cent and all profitable unlisted PSUs to hit the capital markets. This makes around 60 PSUs eligible for disinvestment. While, unlisted and profitable CPSUs include big names like BSNL and Coal India among others.

In October, the Cabinet approved disinvestment in two state-run power utilities — NTPC and Satluj Jal Vidyut Nigam. Besides, the government has also cleared 20 per cent follow-on offer of Rural Electrification Corporation that is expected to fetch about Rs 3,300 crore at the ruling market prices. These three power PSUs are expected to be listed between January and March 2010. The government has also given the nod for divesting an additional 8.38 per cent stake in iron ore producer NMDC while a share sale proposal in PSU steel maker SAIL will be taken to the Cabinet by mid-January next year. However, the real test of the UPA Government will come at the time of disinvestment of wholly owned state-run company Coal India, since it is headquartered in Kolkata and Trinamool Congress may not support the move.

Only time will tell this, but one can easily guess that if the disinvestment of CIL is not done in 2010, opposition against it will be much more aggressive in the next couple of years since West Bengal is scheduled to go to polls in 2011. In the year 2009, public sector hydro power generator NHPC and Oil India got listed on stock exchanges, raising Rs 6,000 crore and over Rs 2,600 crore respectively. Whatever doubts remain on disinvestment front like issue pricing and disinvestment of CIL, credit must be given to the UPA government for making it pretty clear in the beginning itself that it will not divest its equity below 51 per cent. In fact, Finance Minister Pranab Mukherjee said the government does not seek to divest more than 10 per cent in state-run firms for now. A government official said the disinvestment department is in talks with administrative ministries of the 60 CPSUs.

“We are in interaction with the Ministry of Steel for SAIL, we are in interaction with communications ministry on BSNL..We are in interaction on a large number of these 60 companies with their administrative ministries. We are in interaction with them but it does not mean that we are close to divesting them,” he said.

Recently, the Finance Ministry asked 32 nodal ministries to identify state-run firms where the government stake could be sold and asked them to reply by the end of this month. The government has also changed the criteria of using the proceeds of disinvestment for three years. The proceeds for three years would go to National Investment Fund (NIF) and will be available in full for investment as capital expenditure in social sector schemes. Disinvestment of some of unlisted 50 PSUs would not only make them accountable, but would also give them and the government much-needed resources which will now be used for social welfare schemes for three years.