Cii Seeks 50 Per Cent Divestment In Psus

The Confederation of Indian Industry's national council has recommended up to 50 per cent disinvestment in the public sector undertakings. The council, which discussed a report prepared by Escorts chairman and managing director Rajan Nanda, has rejected the government's partial disinvestment policy.

The national council, which consists of the key members of the CII, held its annual meet on February 8. The final report of the annual meet will be made public within a fortnight.

The proposal to give management autonomy in government-owned enterprises to the private sector was forwarded by Nanda. The CII had earlier form-ed a task force headed by Nanda to identify ways to improve the performance of public sector undertakings.

 

In an audio-visual presentation, Nanda pointed out that over Rs 200,000 crore has been invested in the public sector. However, the returns on this capital were barely 4.5 per cent which is much lower than the 16 per cent rate of interest at which the public sector borrows from the financial institutions. To make the sector viable, we need an autonomous management which can concentrate on turning around these under-performing units, Nanda said. Disinvestment in the public sector up to 50 per cent would be enough incentive to the private sector to devote itself to reviving the public sector, he said.

The CII council opposed hostile takeovers and suggested that Sebi should insist on disclosures before a takeover bid and allow buyback of shares before takeovers and non-voting shares. It also identified liquidity crunch as an area of concern for the industry and suggested relaxation of the restrictions on inter-corporate loans to incre-ase liquidity flow into the corporate sector. The council also suggested that banks should finance development projects at lower interest rates.