The government will include the market value of the land in the reserve price when a public sector enterprise (PSU) is divested, Economic Affairs Secretary Shaktikanta Das said.
Mr.Das told The Hindu, “It has been decided that asset valuation will be more appropriate than the equity share valuation for arriving at the reserve prices of PSUs.”
For instance, while fixing the reserve price of ITDC hotels,the government will include the market price of the land each unit holds, he indicated.
In strategic sales, the government divests management control along with its shareholding. Announcing a renewed disinvestment programme in the Union Budget presented on Monday, the government has asked the Niti Aayog to identify the PSUs where the government should exit from management control. The Niti Aayog is expectedto submit its recommendations soon, Mr. Das said.
Some of the strategic sales undertaken during Mr Arun Shourie’s tenure as disinvestment minister had attracted remarks from the CAG over the manner of identification and valuation of core assets like leasehold land and plant and machinery and leasehold land housing the plant and township.
Mr. Shourie had argued in response that assets are valued when the business is to be shut down and not in the case of running ventures. Three layers of committees had concluded that the discounted cash flow method was the best for valuing running businesses, he had said.
Mr. Jaitley has budgeted Rs. 56,500 crore from disinvestment for 2016-17 out of which Rs. 36,000 crore is to come from the sale of minority stakes in PSUs. Another Rs. 20,500 crore is expected to be raised from strategic sales.
Speaking about the demands from industry for reconsidering the Budget announcement on phasing out of tax exemptions and incentives, Mr. Das said: “One can understand the concern of various sectors and interest groups but don’t touch me, touch everybody else approach can’t work.”
On the demands for relaxation in the personal income tax slabs, he said: “There isn’t the fiscal space every year to provide income tax slab relaxations…the government will consider when the space is available”.
Explaining the focus of the budget on agriculture, the Economic Affairs Secretary said that it was recognised that most critical challenge for the macro economy is the farm sector.
“It’s economics more than anything else that determined the budget’s focus. The impression somehow is that if you do something for capital markets and investors in a budget then it is reforms-oriented. The budget would in fact have been a great failure if you leave out the most distressed areas of the economy, the rural and farm sector, in which more than 50 per cent of the population is engaged,” he said.
