Defending disinvestment of its stakes in profit-making Central public sector undertakings (CPSUs), the government on Tuesday said the decision to utilise the proceeds to fund selected social sector programmes was a one-time waiver.
Responding to a calling attention notice in the Rajya Sabha, Finance Minister Pranab Mukherjee said now disinvestment of government shareholding in NTPC (5 per cent), Satluj Jal Vidyut Nigam (10 per cent) and Rural Electrification Corporation (5 per cent) through public offering in the domestic market, was under implementation and likely to be completed by March 31, 2010. He said already listed profitable CPSUs, which were not meeting the mandatory public shareholding of 10 per cent, were to be made compliant and only CPSUs having positive net worth with no accumulated losses, with profits for three preceding consecutive years were to be listed through public offerings out of government’s shareholding or issue of fresh equity by the companies or a combination of both.
The government granted a one-time waiver to enable use of the proceeds from sale of its stakes between April 2009 and March 2012 in full to meet the capital expenditure requirements of selected social sector programmes such as health care, education and rural employment. Since the revenue realisation is not expected to touch previous levels on account of the economic situation, corrective measures are needed since the fiscal deficit level was not acceptable.
The timing of the issue will be decided with the objective of getting the maximum money and not to incur losses. Responding to a question from N.K. Singh (JD-U) on the move when globally governments were infusing capital to pick up stakes, Mr. Mukherjee said it showed the strength of the Indian economy. Earlier, Tapan Sen (CPI-M) questioned the need to raise funds through disinvestment, when PSUs have Rs. 4.85 lakh crore surplus that remained unutilised and whether stock markets were ‘holy places’ where these PSUs could be assessed. D. Raja (CPI) described the move as ‘mother of all scams’ and private appropriation of public property.
He cited examples of BALCO, IPCL and Modern Food as cases where the move left many questions. Mr. Raja also quoted a survey to state that CPSUs were being run more efficiently and had a healthy growth in profits.