Govt spots 44 PSUs for sell-off

NEW DELHI: The Left’s protests have not sapped the government’s enthusiasm for reforms, particularly disinvestment. The government has already identified 44 companies, where it wants to partially offload equity, and the process is expected to be kicked off after the Budget session.

Those PSUs in which government holding is almost 100% may be first on the divestment block. These include companies like NTPC, National Mineral Development Corporation, Neyveli lignite, Ircon, MMTC and Scooters India. Keeping in mind the Left’s sensitivities, two key benchmarks have been kept while putting up proposals for divestment of equity in PSUs.

The first is to retain 75% stake and sell the rest. The second for PSUs in which over 25% stake has already been offloaded, the proposal entails retaining 51% equity with the government.

Party leaders point out that the policy is in line with the UPA CMP which says, “Public sector companies and nationalised banks will be encouraged to enter the capital market to raise resources and offer new investment avenues to retail investors.�

Until the pressure from the Left parties, the government had hoped to raise resources to the tune of Rs 2,400 crore this year from the divestment of stake in Maruti and Bhel. While a 10% stake sale was proposed in Bhel, in Maruti it was proposed to be 7.5%.

Mindful of the Left’s stand, government managers have emphasised that the objective was not to privatise the PSUs, but raise resources for development projects.

At a follow-up meeting earlier this month after the Bhel and Maruti decisions were put off on January 27, government managers told Left leaders that offloading partial equity would strengthen the companies, as it would provide it with funds for revitalisation.

It has promised routing of a substantial chunk of the disinvestment proceeds for education and health. The UPA CMP has pledged to set aside at least 6% of GDP for education, besides raising public spending on health to 2-3% of GDP in five years. Government managers contend that unless funds are raised through such processes, achieving these targets would not be possible.

The Left have also been told that part of the money will also go into revitalising the profit earning PSUs, as well as some of the loss-making ones, where turnarounds can be made.

Companies like Neyveli Lignite, National Mineral Development Corporation, Kudremukh Iron, National Fertilisers, Ircon, MMTC and Scooters India may be early on as government owns almost 100% equity in these companies.

Even if government retains 75% stake in these companies, it can still dispose equity to the tune of 18.5% in Neyveli Lignite, 24% in Kudremukh, 25% in Ircon and 24.3% in MMTC.

It may, however, face stronger protests from the Left parties on divestment of stake in companies like MTNL, Gail, Hindustan Petroleum Corporation, Shipping Corporation, Container Corporation and Bharat Petroleum Corportion, Dredging Corp and Bharat Earthmovers, where more than 25% stake has already been offloaded.

Other companies in the list are Powergrid Corp, PFC, Rastriya Ispat, Rites, Pawanhans, Gardenreach, Indian Renewable Energy, Electronic Corporation Of India and Hindustan Paper Nigam.