Govt may use 25% disinvestment money to revive sick units

The government is likely to revert to the policy of using 25% of the disinvestment proceeds for reviving sick PSUs and recapitalising the profitable ones from the next fiscal.

The government, according to sources, is likely to take some decision in the forthcoming Budget in this regard as its three-year policy of using entire funds from disinvestment for social sector programmes ends on March 31, 2012.

An announcement in this regard in likely in the Budget, 2012-13.

The earlier stated policy of the government was to utilise 75% of the disinvestment proceeds for social sector programmes and the rest for recapitalisation and revival of sick and profitable units.

However, in view of the global financial crisis of 2008 and the subsequent fiscal pressures, the government changed the policy and decided to use the entire proceeds from this route for funding social sector schemes for three years (2009-10 to 2011-12).

In 2009-10 and 2010-11 fiscals, the government had raised Rs 23,553 crore and Rs 22,145 crore respectively through disinvestment. So far this fiscal, the government has been able to raise just Rs 1,145 crore through stake sale in PSUs.

The government had to delay its originally envisaged plan for PSU disinvestment due to volatile stock market conditions.

It had budgeted for Rs 40,000 crore this fiscal but it could garner only Rs 1,145 crore as most of the big ticket sell offs have been pushed to 2012-13.

PSUs lined up for stake sale include Hindustan Copper, SAIL, BHEL and Oil India.