'Time not right for disinvestment'

As stock markets came under heavy selling pressure, Finance Minister Pranab Mukherjee on Friday hinted that the time was not right to sell government stake in public sector units.

“I am fully aware of the current volatile situation in the market, and surely not only me, any prudent finance minister would not like to dispose of valuable assets,” Mukherjee said in the Lok Sabha.

Europe's debt problems and the uncertainty about the US economic recovery resulted in a sharp fall in the US and European markets. This led to a plunge in the Bombay Stock Exchange Sensex.

Mukherjee said while taking a decision on disinvestment, the government would keep in mind the market condition. “We cannot sell our valuable assets at a condition, at a market situation where we would not get adequate prices,” he said. The objective was to discover the latent price which is not known, he said, adding the real value of a company was discovered when it was traded on stock exchanges.

Citing an example of discovering real value, Mukherjee said the Rs 10 share value of Coal India Limited, which according to the book value mechanism would be just Rs 52, on Friday fetches Rs 387.

The government plans to garner Rs 40,000 crore by selling its stake in public sector units this financial year. However, so far, it has mopped up only Rs 1,144 crore. This came from the only disinvestment in this financial year so far, through the stake sale in Power Finance Corporation through a follow-on public offer in May. In 2010-11, the government could mop up a little over Rs 22,000 through disinvestment, against the target of Rs 40,000 crore.

The finance minister said he would not seek proceeds from disinvestment to meet capital expenditure needs of social sector programmes beyond March 2012.