Move To Delink Vsnl Issue From Divestment Plan

The meeting of the core group, which lasted till late on Monday evening, was also in favour of scaling down the government's holding in the company by 7.6 per cent from the paid-up equity of Rs 80 crore. This should fetch the government over Rs 700 crore in rupee terms, or roughly $ 200 million. This is much lower than the originally proposed $ 700 million.

The core group is also unlikely to take the proposal to the cabinet tomorrow. Sources said this was primarily because the meeting ended too late for the core group to finalise the Cabinet note which would have to be put up to the Cabinet for consideration.

 

In the event of the government abiding by the core group's

decision, the annual divestment programme would have been

initiated. The government has

targeted Rs 5,000 crore to be raised through the divestment. In a year in which indirect tax

revenues, especially excise are under pressure, raising this

sum would be critical in achieving the fiscal deficit target of 5 per cent for 1996-97.

It is the considered view in government that they should in future piggy-back on the public issues by PSUs and, thereby, distancing themselves from any controversy over pricing. At the same time, the public issue also offers the government a better price.

However, officials maintain that the government would not delay its own divestment programme if the concerned PSUs failed to put out an agenda for a public issue.

It is now clear that VSNL will be the only PSU that will figure

in the first round of divestment.

As per the steering committee of the United Front, the government had the clearance to divest upto

10 per cent shares of Videsh Sanchar Nigam Ltd (VSNL), Mahanagar Telephone Nigam Ltd (MTNL), Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC).