Create public assets from divestment proceeds: Kelkar

Vijay Kelkar, chairman of the Thirteenth Finance Commission, today stressed the need for liberalisation of the current “restrictive” policy for deployment of resources through disinvestment or privatisation by allowing the government to use them as a part of the budgetary resources to create new public assets.

These assets can be in the form of better urban infrastructure by providing capital grants to our cities or for revamping country’s energy base through ambitious solar energy programme or the expansion of rural road network or for recharging country’s depleting water bodies and cleaning of rivers. Kelkar noted that this would require the Union government sharing the proceeds from disinvestment or privatisation with the state governments on a systematic basis on the lines of the Finance Commission’s devolution formula for the sharing of central taxes with the states. At present, deployment of resources is to be channelised through the National Investment Fund.

Kelkar was addressing the Sir Purshotamdas Thakurdas Memorial Lecture organised by the Indian Institute of Banking and Finance. He said a narrow focus upon maximising proceeds was unlikely to yield sound policies on disinvestment.