10% Of Vsnl, Ioc Selloff Proceeds For Psu Recast

Industry minister Murasoli Maran said the process of appropriation of 10 per cent of the disinvestment proceeds will begin from the first two tranches of disinvestment.

The appropriated sum will be ploughed back into restructuring PSUs through the investment fund to be set up for this purpose.

The proceeds of the investment fund will be utilised either for turning around the potentially sick PSUs or to ``window dress the BIFR cases through marginal capital restructuring.

The ``window dressing strategy is aimed at fetching the government a better disinvestment price, particularly in those PSUs where it is proposing total withdrawal.

Otherwise, who would want to buy BIFR companies? ministry sources said.

 

The proposal to appropriate part of the disinvestment proceeds would require a cabinet clearance.

The first tranche of disinvestment is, however, not expected to hit the market before January 1997.

The ministry expects the cabinet clearance necessary for restructuring of 49 PSUs under the department of heavy industries through the revolving fund to be obtained by then.

Apart from the industry ministry, the Disinvestment Commission too strongly favours the restructuring of PSUs to proceed with the disinvestment process.

Commission chairman G V Ramakrisha said recently that he proposes to move a cabinet note independently, emphasising the need for restructuring and greater autonomy for PSU managements.

This implies that the government will require a fairly large corpus to implement its restructuring plans. The minister clarified that from this point of view, 10% of the selloff proceeds is peanuts.

The PSUs have been arguing that selloff proceeds should be ploughed back into the unit concerned instead of being used to bridge the budget deficit.

The argument has not, however, been favoured by the government which has reserved the right to decide how it will utilise monies raised through the sale of its shares.

GVR statement contested

Contrary to the media statements issued by Disinvestment Commission chairman G V Ramakrishna, the commission may not be able to bypass the industry ministry in its bid to move a cabinet note seeking autonomy for public sector undertakings.

Ramakrishna has been arguing that since he has been granted the rank of a minister of state, the commission has the autonomy to move cabinet notes independently.

Industry ministry sources, however, said the note will still have to be routed through the department of public enterprises (DPE) as procedurally, ot will have to be moved by the concerned joint secretary and signed by the concerned secretary.