10% cap on divestment in PSU to stay for now

Finance Minister Pranab Mukherjee today made it clear that the government would not travel the path of unbridled disinvestment. The 10 per cent cap on offloading shares of profit-making public-sector undertakings (PSUs) would stay for the next four years, as Mukherjee said he preferred a cautious approach towards disinvestment.

“Nobody can guarantee that it (the cap) would remain at 10 per cent. But, in the present situation, it will remain at 10 per cent. After four years, a new government would come and it might continue with it or scrap it altogether. But, over the next four years, we will continue in this manner,” Mukherjee told Rajya Sabha, responding to a calling-attention motion.

Mukherjee laid out the policy after industrialist and Rajya Sabha Member Rahul Bajaj asked him to be more “ambitious” in disinvestment and “not throw away taxpayers’ money” by running sick PSUs. He asked: “What are we holding the PSUs for? The government should take care of NREGA and health mission, tackle terrorism. Why should the government run hotels and loss-making airlines?”

Emphasising that the disinvestment policy of the second UPA government was not new and this process had been in practice since the 1990s, Mukherjee told Bajaj: “I normally accept his advice, but, in this case, I would rather like to be conservative and meek than bold.”

Justifying the decision to bring the disinvestment proceeds out of the National Investment Fund, Mukherjee said: “This level of fiscal deficit is unsustainable. We could go for National Rural Employment Guarantee scheme and loan waiver schemes because we had low fiscal deficit…that provided the economic muscle. I have sought this exemption because now we require a massive investment in the social sector.”

Mukherjee also said his government would not roll out a list of PSUs that have been targeted for disinvestment. “I don’t want to indicate time (when disinvestment would take place) to help stock brokers. I deliberately didn’t give a list in my Budget. Our objective is to get the maximum price from the market, not charity. The timing will be decided after consulting the experts, the PSU concerned and the nodal ministries.”

However, the finance minister said disinvestment in three power PSUs — NTPC, Rural Electrification Corporation and Satluj Jal Vidyut Nigam — would be completed in the current financial year.

The Left slammed the disinvestment process calling it a “plan to make way for creeping privatisation” and selling family silver to meet the grocer’s bills. But Mukherjee pointed out that even during the tenure of the first UPA, when the Left parties were supporting the government, seven PSUs were disinvested.

Dismissing Bajaj’s suggestions, Mukherjee also said the government would continue to run companies. “I am not going for outright privatisation. We are doing business. Sometimes it is good business, sometimes it is bad business. But it doesn’t mean we will stop doing business.”