Govt appoints Dis`ment Secy, small stake sell-off first

Last Updated: Wednesday, July 22, 2009 - 00:41

New Delhi: The Finance Ministry on Tuesday said that the disinvestment programme will kick off with the dilution of government equity in listed entities, where public holding is less.
In an interview with a media agency, Finance Secretary Ashok Chawla
also ruled out using the proceeds of disinvestment to finance fiscal deficit, even as it is expected to widen to about 18-year high of 6.8 percent of GDP this fiscal.

"Basically, we will first go with the companies which are listed and where stocks in public float is much less-- two percent, five percent etc. There is scope for that to increase," Chawla said.

There are at least 12 listed public sector units where public shareholding is less than 10 percent. They include companies like NMDC, MMTC, Neyveli Lignite, Hindustan Copper.

However, Chawla did not name the companies where disinvestment process could start.

"Now we have had some views, preliminary identification of where it (disinvestment) will be possible, we had some discussions with ministries. It is at that stage," he said.

When asked about the amount government aims to raise from disinvestment, Chawla said, numbers cannot be fixed as yet since these are only preliminary discussions.
"Now what will finally be agreed to? What will the Cabinet approve? What percentage? When it will happen? What
will be the market price? That will determine the amount which
is a function of number of shares and market price. So, there cannot be a maximum target per se," Chawla said.

Chawla indicated that the advise given by the Economic Survey about raising Rs 25,000 crore from disinvestment every year might not happen this fiscal.

"What the economic survey says you should look at Rs 25,000 crore a year, but that may or may not happen every
year. In the current year already four months or so have gone.

There is time process, through which these companies have to go, so therefore for the current year it is very difficult to say what the amount will be," the Finance Secretary said.

He also said the proceeds from disinvestment will not be
used to fund widening fiscal deficit. "The amount will not be
used for to finance fiscal deficit, it would be used for high priority social sector programmes," he said.

There were speculations that the government may use part of the proceeds to finance fiscal deficit, but currently the proceeds go to the National Investment Fund, norms of which do not allow this.

When asked whether NIF norms will be changed, Chawla said, "That I can`t say. The Cabinet will decide that. But, either way whether it is spent through NIF or otherwise, it
will be spent on flagship social sector programmes," he said.

Disinvestment Secy appointed

West Bengal Power Secretary Sunil
Mitra will be the new Disinvestment Secretary, at a time when offloading of government equity in public sector units is hogging the headlines.

"The Appointments Committee of the Cabinet (ACC) has approved the appointment of Sunil Mitra, as Secretary Department of Disinvestment, Ministry of Finance," an official
release said.

He will replace Rahul Khullar, who has moved from the Disinvestment Department
to take charge as Commerce Secretary.

Mitra, an IAS of 1975 batch, was earlier pivotal in formulation of disinvestment policy for 26 public sector undertakings in West Bengal as Secretary for Public Enterprises and Industrial Reconstruction.

Bureau Report



First Published: Wednesday, July 22, 2009 - 00:41

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