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Union budget unlikely to set privatisation target

The government is unlikely to set a new privatisation target in next week's union budget because of its repeated failure to meet targets since the country launched its economic reform programme 10 years ago, analysts say.

Finance Minister Yashwant Sinha is due to unveil the 2001/2002 budget on February 28.

"I don't expect him to set a target. Performance counts more than any targets," said Charan Wadhwa, economist with New Delhi-based think-tank Centre for Policy Research.

"This is one credit that has discredited almost all the finance ministers in the last 10 years," he added.

The country's faltering privatisation programme has so far raised just over 40 per cent of its cumulative target of Rs 443 billion since 1991 when India launched economic reforms.

Even in the current financial year, which ends on March 31, the government is likely to raise just Rs 5.51 billion of its annual target of Rs100 billion through the sale of Bharat Aluminium Company (BALCO) announced on Wednesday.

"I would be happy if the finance minister does not set a divestment target for the next year since for three years it has been impossible to meet them," said Tarun Das, secretary-general of the Confederation of Indian Industry (CII), an influential industry lobby.

"Take it out of the budget. Whatever comes will be a bonus," added Das.

Divestment Minister Arun Shourie said earlier this week that setting a target also gave prospective buyers or bidders an opportunity to beat prices down.

"Once you set a target, you are under compulsion to sell. So prospective bidders knowing that you have to sell one way or the other will beat you down in price," he said.

A decision not to set a target would underline the government's shift in thinking away from using such sales as a way to cut the budget deficit towards using them to improve competitiveness.

"It is the view of the prime minister, the finance minister and the government that the divestment process must be delinked from the compulsions to meet the fiscal deficit," Shourie said.

Analysts estimate that government funds locked up in public sector firms total more than Rs 2.3 trillion, or some 20 per cent of the 1999/2000 gross domestic product.

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