Sell-Off Target Stepped Up To Rs 5000cr

Finance minister Yashwant Sinha yesterday broadly indicated the shape of public sector reforms to come, by promising to accelerate public sector reforms while building a strong and transparent system for PSU disinvestment.

The minister also set a disinvestment target of Rs 5000 crore for 1998-99, Rs 200 crore higher than the budget estimates for the current financial year and Rs 4,094 crore higher than the actual disinvestment receipts of Rs 906 crore during the same period.

Though the actual gameplan of the government on PSU disinvestment will unfold only in the regular budget, there are several indications that the easing of government control on the monolithic public sector will figure on the top of the new governments agenda for reforms.

Sources indicate that the Disinvestment Commission chairman, G V Ramakrishna has already sought the restoration of the Commissions original terms of reference. The United Front government had originally empowered the Commission to recommend public sector reforms, but it was subsequently shorn of its powers and empowered to only recommend disinvestment procedures in PSUs assigned to it.

According to sources, there are indications that the Vajpayee government is willing to take the PSUs process forward by conferring statutory status on the Commission. Though no decision has yet been taken, sources said the government was seriously considering the possibility. The UF government constituted the Commission as an advisory body.

Ramakrishna is expected to call on industry minister Sikandar Bakht and finance minister Yashwant Sinha next week to present his case. Sources said the rationale for restoring the powers of the Commission are strong since the decision was notified by an outgoing government. Granting statutory powers to the Commission may not also be difficult since the Vajpayee government is not bound by the compulsions of the UF government, which depended on the support of Left Parties.

Signals emanating from Udyog Bhawan too indicate that Bakht is not averse to disinvestment. Simultaneously, the Securities and Exchange Board of India has also recommended that domestic disinvestment would be ideal to lift capital market sentiments. Divesting PSU stock domestically would also find favour with the BJP government, since it would amount to divesting stock in public sector companies, which have been set up with tax payers money.

There are also indications that the BJP has no ideological hang-ups about divesting government holding in public sector companies. Besides, it is not tied down by the Congress historical affinity for the commanding heights. According to sources, the Thatcher government model for divesting public sector stock in favour of the small investor is reported to have found favour with the BJP government.