FinMin may drop proposal to dissolve SUUTI

The Finance Ministry is planning to drop the proposal to dissolve the Specified Undertaking of UTI (SUUTI), in view of the recent Sebi guideline opening other windows for selling government equity in PSUs to meet the disinvestment target of Rs 40,000 crore this fiscal.

"We will take final decision [whether to dissolve SUUTI or not] within a week," a top Finance Ministry official said.

The ministry had earlier proposed to dissolve the SUUTI and set up a new entity to buy government equity in public sector undertakings from funds raised by pledging the existing assets of SUUTI.

The new entity, it was estimated, could have raised at around Rs 50,000 crore by pledging the assets of SUUTI.

The proposal, however, may be shelved in view of the Sebi guideline for dilution of promoter stake by way of auction and private placement. These norms will help the government to offload its equity in the PSUs.

"Now the government also has option to raise money by selling shares in state-run firms through a new auction method approved recently by the Sebi," the official said, adding that this has necessitated a rethink.

Although the government has a target of rising Rs 40,000 crore during 2012-13 through disinvestment, it had so far mopped up only Rs 1,145 crore through sale of its equity in Power Finance Corporation (PFC).

Hard pressed for funds, the government has been looking for alternate ways to raise resources to bridge the fiscal deficit which is expected to exceed the Budget estimate of 4.6% of the Gross Domestic Product (GDP).