CAG taking 'narrow view'; FM dealing fair: Shourie
Stung by the Comptroller and Auditor General's criticism of PSUs sell off, Arun Shourie, Disinvestment Minister in previous NDA regime, on Sunday hit back saying CAG had taken a "very narrow" perspective but thanked Finance Minister P Chidambaram ...
By PTI |
NEW DELHI: Stung by the Comptroller and Auditor General's criticism of PSUs sell off, Arun Shourie, Disinvestment Minister in previous NDA regime, on Sunday hit back saying CAG had taken a "very narrow" perspective but thanked Finance Minister P Chidambaram for a "fair" response on the issue.
"The CAG is taking a very narrow auditor's perspective when its task really should be to see how government can implement its declared policy. The CAG is not focusing on the impracticality of many of the things it is recommending like taking a uniform view across sectors," said Shourie .
At the same time, Shourie pointed to the response of Finance Ministry on various issues, including valuation process and number of bidders in the CAG report and said, "I compliment Chidambaram for being very fair."
CAG had criticised the disinvestment in nine PSUs during 1999-2003, saying the the process was flawed and led to undervaluation.
In a point by point rebuttal to CAG, Shourie said: "I find infact that the Finance Ministry has been most fair in its reports sent to CAG - both in cases of hotels and nine enterprises."
On valuation, the senior BJP leader said: "the values we realised were six to eight times higher per share than had been realised from 1991 to 1998 (the tenure of Congress and United front).
Asked about post closing adjustments in the privatised entities, Shourie said all the PSUs referred by CAG, of which two-third were loss making, were sold for Rs 11,000 crore. "While they yielded the average dividend of only Rs 52 crore, fixed deposit interest on sale proceeds alone would have given the government up to Rs 800 crore every year."
Moreover, his government got rid of the companies that were losing about Rs 126 crore every year, Shourie said, adding: "calculate what the government has saved on that account."
Shourie found the remarks of CAG that the core assets of the companies that were sold were not valued as "strange".
"Core assets are the assets without which the company cannot run. As such their value is a part of the the cash flow which is expected over the years. And this is what is captured in Discounted Cash Flow method."
"How can you include the contribution they make to the cash flow and also add them separately for estimating the value of the company," he asked.
Shourie said that privatisation of the nine PSUs have been beneficial to the employees and the companies too.
"The CAG is taking a very narrow auditor's perspective when its task really should be to see how government can implement its declared policy. The CAG is not focusing on the impracticality of many of the things it is recommending like taking a uniform view across sectors," said Shourie .
At the same time, Shourie pointed to the response of Finance Ministry on various issues, including valuation process and number of bidders in the CAG report and said, "I compliment Chidambaram for being very fair."
CAG had criticised the disinvestment in nine PSUs during 1999-2003, saying the the process was flawed and led to undervaluation.
In a point by point rebuttal to CAG, Shourie said: "I find infact that the Finance Ministry has been most fair in its reports sent to CAG - both in cases of hotels and nine enterprises."
On valuation, the senior BJP leader said: "the values we realised were six to eight times higher per share than had been realised from 1991 to 1998 (the tenure of Congress and United front).
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Asked about post closing adjustments in the privatised entities, Shourie said all the PSUs referred by CAG, of which two-third were loss making, were sold for Rs 11,000 crore. "While they yielded the average dividend of only Rs 52 crore, fixed deposit interest on sale proceeds alone would have given the government up to Rs 800 crore every year."
Moreover, his government got rid of the companies that were losing about Rs 126 crore every year, Shourie said, adding: "calculate what the government has saved on that account."
Shourie found the remarks of CAG that the core assets of the companies that were sold were not valued as "strange".
"Core assets are the assets without which the company cannot run. As such their value is a part of the the cash flow which is expected over the years. And this is what is captured in Discounted Cash Flow method."
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"How can you include the contribution they make to the cash flow and also add them separately for estimating the value of the company," he asked.
Shourie said that privatisation of the nine PSUs have been beneficial to the employees and the companies too.
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"Wages and allowances of employees of the companies that were privatised have increased, production ans sales have multiplied, taxes these companies pay have gone up and the value of their shares have zoomed," he said.
"Balco is completing Rs 3,000 crore expansion, Its production has more than doubled. Its tax contribution has increased to over 240 per cent of what it was," Shourie said.
"In the case of Hindustan Zinc production has gone up by 170 per cent, cost of production gone down by one-eighth and turnover has increased three-fold," he added.
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