Assocham For One-Time Psu Selloff

At a closed door meeting on October 15, the apex chamber, whose revised opinions on foreign investment have raised a storm, decided to back full divestment of government ownership of the public sector.

The model of the United Kingdom has been suggested as an example.

The chamber, which is facing criticism for a volte face in its attitude to reforms, is apparently out to prove the critics wrong.

Apart from the recommendations on disinvestment, Assocham will give special reference to three points in a report to be submitted to Prime Minister H D Deve Gowda next month.

They are:

l Hard decisions, the responsibility for which has to be shared by labour, with whom the chamber will for the first time organise periodic meetins. These suggestions will serve as inputs for the report to the Prime Minister.

 

l Capital market reforms, the most important of which would be changing of the Securities & Exchange Board of India (Sebi)s role from that of a regulator to a coordinator.

l A lower interest rate regime, with a suggested immediate band between 11 and 14 per cent.

The chambers current stand is in response to the Prime Ministers call for concrete suggestions to accelerate the pace of development.

Assocham feels that a 3-5 per cent disinvestment in public sector blue-chips will fail to achieve the desired results and lays emphasis on management diversification.

There is an urgent need to free the public sector management from the shackles of government control, which should be run as professionally managed commercial organisations, a senior chamber member said.

The chamber will request the Union government for disinvestment of 51 per cent of the stake in these undertakings and at least 25 per cent for strategic units.

Assocham has suggested that the PSU management structure should be drawn along the lines of UK-based public sectors British Telecom and British Steel.

In case of those companies, the government exercises no control over management decisions despite a majority stake.

The total investment in public sector undertakings is well over Rs 2,00,000 crore and a 10 per cent return will wipe out our entire deficit, a member said.

Assocham has also decided to hold periodic meetings with trade unions to arrive at a consensus on privatisation.

We have to convince them that hard economic decisions have to be taken in the national interest. Once they become a party in our efforts, the whole process becomes all the more easier, the member added.

Assocham will stress pragmatic steps for revival of the capital markets as it feels that the measures initiated by the finance minister so far have been only half-hearted.