Union Finance Minister Arun Jaitley, on Wednesday, sent out a positive signal on the Narendra Modi Government’s policy on disinvestment of state-owned companies.
At a meeting with the officials of the Department of Disinvestment (DoD) in the Finance Ministry, Mr. Jaitley gave the go-ahead for the ongoing process of selling its residual stake in Hindustan Zinc Ltd. (HZL) and Balco.
The government holds 49 per cent stake in Balco and 29.5 per cent in HZL.
“We will start the process of appointing valuers for the stake sale,” Department of Disinvestment Secretary Ravi Mathur told reporters after the meeting with Mr. Jaitley.
The development assumes significance as there are concerns that the Modi Government may not be open to the idea of disinvestment since the BJP manifesto is silent on the subject. Also, Mr. Modi is reported to have preferred to support the revival of government undertakings as Gujarat Chief Minister in the State over disinvestment. However, with tax revenues remaining sluggish in a stagnant economy, the Modi Government will have to rely on non-tax sources of funds.
Sale of crown jewels, if the government decides to go ahead with divesting its stake in blue chip PSUs such as ONGC, Coal India and IOC, could fetch good valuations given the stock market has been on record high.
Mr. Jaitley was the Disinvestment Minister in the Atal Bihari Vajpayee Government.
“At the meeting, he asked questions about the disinvestment cases he had handled as the Minister in-charge,” said a source.
Mr. Mathur also said that issues pertaining to loss-making PSUs also figured at the meeting of the officials of the department with the new Finance Minister. However, no list of disinvestment cases that could be taken up during the year was proposed to the new Finance Minister. The DoD would be starting the process of identifying sick PSUs for a possible disinvestment, Mr. Mathur said. “We apprised the Finance Minister of the current policy. He wanted to understand how the last minority stake sales went through,” he added.
The UPA government had initially planned to sell the residual stake in Balco and HZL last fiscal. However, in interim Budget in February, it postponed the stake sale to the current fiscal. In January, 2012, the Vedanta group had proposed to acquire the government’s remaining stake in the two erstwhile PSUs for about Rs.17,275 crore. In October, 2012, shareholders gave their nod to raise the offers for acquiring the remaining government stake in HZL and Balco by up to 43 per cent or Rs.24,663 crore.
