Cabinet paves way for sale of Suuti stake

BSNL and MTNL to get Rs 11,000 crore in return for their 4G spectrum

The government on Thursday decided not to dismantle the Specified Undertaking of Unit Trust of India (Suuti) for now, paving way for sale of its stake in three private companies.

The undertaking holds an 11.54 per cent stake in ITC, 23.58 per cent in Axis Bank and 8.27 per cent in Larsen & Toubro - worth Rs 34,351 crore by Thursday's market value. Divesting part of these could help the government meet its target of raising Rs 14,000 crore through sale of residual stake in non-government companies. However, sources said, it might not opt to offload the entire Suuti stake in these companies.

Of its target of mopping up Rs 40,000 crore through disinvestment in 2013-14, the government has so far managed to raise less than Rs 3,000 crore, including Rs 1,637 crore from sale of stake in Power Grid Corp recently. Also, an empowered group of ministers headed by Finance Minister P Chidambaram earlier in the day deferred stake sale in Indian Oil Corporation on opposition from the petroleum ministry.

The Union Cabinet on Thursday also cleared a proposal to refund the Rs 11,258 crore Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) had paid in 2010 for Broadband Wireless Access (BWA) spectrum, in return for the airwaves held by them.

Ahead of the Lok Sabha elections, the Cabinet Committee on Economic Affairs (CCEA) also okayed a proposal to spend Rs 10,000 crore on adding 10,000 seats in the existing central and state medical colleges. The Centre will provide Rs 7,500 crore for the programme, while states will contribute Rs 2,500 crore.

"The proposal of the finance ministry (with regard to Suuti) has been approved," Information & Broadcasting Minister Manish Tewari told reporters after a Cabinet meeting on Thursday.

The Cabinet had in March 2012 agreed that Suuti should be wound up and its assets transferred to the proposed National Asset Management Company (NAMC). Retaining Suuti will make divestment in the three private companies relatively easy, as a Cabinet clearance will have to be taken for stake sale after the assets are transferred to NAMC.

The government is also in the process of selling its residual stake in Balco and Hindustan Zinc. It holds 49 per cent equity in the former and 29.5 per cent in the latter. The law ministry recently opined the government could go ahead with sale of its stake in Balco.