labels: industry - general, economy - general, governance
Left, government achieves consensus on divestment news
22 November 2005

New Delhi: The Left parties have agreed to consider the government's plan to sell minority stakes in state companies, finance minister P Chaidambaram said today.

The statement has raised hopes for a revival of the virtually shelved divestment programme.

However, according to Chidambaram "State firms short-listed for the sale do not include leading government-owned companies in sectors such as energy, power and metals."

A few days ago the FM had announced that the government had identified a few profit making non-navratna PSUs for selling minority stakes by the end of the fiscal. He had said, "We will begin discussions (with Left parties)," but did not name the PSUs identified for a potential sale of stake.

He also said that the respective ministries would have to come up with the proposals for divestment of PSUs under them.

The 2005-06 Budget had set a disinvestment target of Rs4,000 crore. Faced with a resource crunch, the government is under an pressure to mobilise resources to fund its ambitious socio-economic projects like the National Employment Guarantee Act as well as multiple developmental projects in the social and infrastructure sectors.

The government, which urgently needs money to fund infrastructure development in the country, has been trying to revive its proposed disinvestment of PSUs but with little success. Earlier this year the government tried to offload a 10-per cent stake in the profitable engineering goods company BHEL only to drop the idea as the Left parties had opposed the plan stridently, even threatening to pull out support to the UPA government.

The Left parties' support is crucial for the ruling coalition to stay in power.

Soon after assuming office the Congress-led UPA government formally called-off plans to sell 13 profit-making central Public Sector Undertakings (PSUs) including National Aluminium Company Limited (NALCO), Hindustan Petroleum Corporation Limited (HPCL) and Shipping Corporation of India (SCI).

Of around 240 central PSUs, only 28 are listed and most of them like NTPC have unlocked higher value after listing. Several companies like Air-India, Indian Airlines, Bharat Sanchar Nigam, National Hydro Power Corporation and Power Finance Corporation require funds for expansion and can raise the money from the market. In another effort the government is planning to sell residual equity in PSUs that were privatised by the earlier National Democratic Alliance government.

The Left's stance is not unexpected as CPI(M) chief Prakash Karat has earlier stated that his party has no problem with the public offer route to divest minority stake in companies other than Navratnas.

He has made it clear that CPI(M) was opposed to the divestment of Navratna companies but shares could be sold in other companies to raise resources for social sector.



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Left, government achieves consensus on divestment