Finance Minister Pranab Mukherjee indicated that he was not contemplating any downward revision in the disinvestment target of Rs.40,000 crore set for the current fiscal, as of now. The government's effort would be to achieve it but much would depend on various other factors.
“I am not revising it [disinvestment target] right now. We have fixed the target and we will try to achieve it, but it depends on many other situations, particularly the economic health conditions,” Mr. Mukherjee told the media on the sidelines of a seminar on disinvestment. Till date, the government has been able to mop up a mere Rs.1,145 crore through the sole equity sell-off in the Power Finance Corporation (PFC). Stock markets have remained either very volatile or in a tailspin in the wake of the global economic uncertainties such as the slowdown in the U.S. and the ongoing eurozone sovereign debt crisis.
As a result, all public offerings of public sector undertakings (PSUs) lined up for stake sale in 2011-12 have been kept in abeyance. With more than half the fiscal year over, questions are not being raised in various quarters as to whether the disinvestment target can at all be met. Referring to these concerns, Mr. Mukherjee said: “All these aspects have to be taken into account and the government will take a decision at the appropriate time.” PSUs that were initially lined up for stake sale were SAIL and Hindustan Copper (HCL), ONGC, BHEL, RINL, Hindustan Aeronautics and NBCC, among others.
Earlier, inaugurating the seminar on ‘PSU disinvestment through listing — a tool for improved corporate governance' here, Mr. Mukherjee maintained that the government would retain at least 51 per cent shareholding in PSUs to keep them in the public sector fold while pointing out that a higher stake unnecessarily locked up capital which could otherwise be deployed in social sector development. “Keeping more than 51 per cent equity in government companies locked-up does not make economic sense when such valuable resources are required for redeployment in area where development is needed … Retaining more than 51 per cent government shareholding in a company has no impact on its character as a CPSE [Central public sector enterprise] and it only keeps government investment locked up, often at a value which may be lower than what the market would offer,” he said.
Mr. Mukherjee said there were 50 listed Central PSUs now which accounted for 22.25 per cent share of the total market capitalisation on the Bombay Stock Exchange. “Through the public offerings of CPSE, the government has endeavoured to unlock the true nature of these public sectors and, most important, to provide an opportunity to the people of India to become shareholders in these companies,” he said. Mr. Mukherjee asserted that the true worth of a company could only be gauged on its listing and when its shares were publicly traded, which unlocked the true value of the company.