Details on disinvestment soon: FM

Firm on divesting stake in public sector undertakings, Finance Minister Pranab Mukherjee today said he has initiated talks with other ministries to identify PSUs where a portion of government equity could be sold and that details would be announced soon.     

"My ministry has initiated discussions with other ministries and departments to identify public sector undertakings, where a portion of government shareholding could be sold or raise fresh equity by PSUs to meet their fund requirement," he said in Lok Sabha, replying to the debate on Budget 2009-10.

"Details are being worked out and could be announced in due course," he said, adding that requirements by PSUs could be for modernisation, technical upgradation or expansion.     

Commenting about the reactions of the stock markets, which tanked more than 879 points on the day of presentation of budget, as Mukherjee did not elaborate on government's disinvestment agenda, he said there was expectation that the Finance Minister will also give a list of PSU companies from where disinvestment will take place.    

"Unfortunately it did not happen. Therefore, I would not use the word frustration but there was a disappointment and this had an impact on the stock market," he added.  

The Finance Minister also recalled President Pratibha Patil's address to the joint sitting of Parliament on June 4 this year when she spelt out clearly the policy of the UPA government that the government will retain at least 51 per cent equity in all PSUs, but it (government) would invite people's participation in these PSUs by way of stake sale.     

"And this was reiterated in my Budget on July 6," Mukherjee said.     

Another aspect affecting the stock market is volatality of FII inflows, he said.

"We all know the global financial crisis did not affect Indian banks or financial markets directly but it did expose a number of weaknesses in our financial system. The events of last two years and outflows and inflows of FIIs equity more recently has brought home with renewed force the volatile nature of certain private capital flows," he said.     

These flows provide critical risk capital to the economy and volatile nature of these flows have negative impact on investment.     

"We have to create necessary policy environment that helps in addressing these concerns," Mukherjee said.