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Sinha to go ahead with divestment despite Balco imbroglio

Finance Minister Yashwant Sinha is likely to give a further policy push to divestment in his Budget without getting bogged down by a storm in Parliament over the sale of government equity in the state-owned Bharat Aluminium Company Ltd (Balco).

Analysts do not foresee the Balco controversy acting as a deterrent for the finance minister since the opposition, notably, the Congress has targeted the government not on the policy issue but the manner in which the valuation was done.

A question of transparency has been raised by the political parties, including some of the supporting parties in the National Democratic Alliance Government.

''We are not against divestment. We are doing that in our own state. All that we want is transparency,'' Telegu Desam leader in Lok Sabha K Yerranaidu said.

Divestment Minister Arun Shourie, on his part, is doing his best to try and convince the supporting parties that the Balco-Sterlite deal was above board.

''I have told TDP leaders to ask me not one but 50 questions on the Balco deal and we are prepared to discuss it all inside and outside Parliament,'' Mr Shourie said.

While the signing of the deal with Sterlite, which quoted the highest bid of Rs 5.51 billion for Balco might take some time in the backdrop of a face-off between the government and the opposition, analysts feel that even the shortfall of the Rs 100 billion divestment targe

t for the year 2000-01 would not come as a major roadblock for implementing the new public enterprise policy.

The implementation of divestment programme is mainly a function of the market forces.

''The time schedule depends on the market forces,'' Shourie has been defending his department as and when he is reminded of the slip in the target. Against the target of Rs 100 billion for the year 1999-2000, the achievement was Rs 18.29 billion.

Given the experience of the last 11 years, ever since reforms were introduced, the finance minister would once again set a target; no matter whether the previous milestones were reached or not. In the first year of reforms, the government raised Rs 30.38 billion against target of Rs 25 billion, in 1992-93, the realisation was Rs 19.13 billion against Rs 25 billion.

The then FM went ahead and fixed a target of Rs 40 billion for 1994-95 undeterred by the fact that there was nil realisation in the previous year against the target of Rs 35 billion. It was only in 1994-95 and 1998-99 that the targets were exceeded.

Sinha would also be encouraged to look for a higher amount through divestment since the Cabinet Committee on Divestment (CCD) has given in-principle approval for 30 PSUs, which are at different stages of implementation.

Notable among them are Air India, Indian Airlines, IBP, Maruti Udyog Ltd, Hindustan Cable, Indian Petrochemical Corporation, Videsh Sanchar Nigam Ltd and the CMC Ltd.

With the closing of the technical bids for the airlines, the A-I/IA divestment is expected to be completed by June, 2001.

The government is committed to bring down its stake in all non-strategic PSUs to 26 per cent or lower, if necessary, restructure and revive potentially viable PSUs so that better realisation was possible and close down the units, which cannot be revived.

There were times when differences among cabinet members arose over what was the strategic and what was the non-strategic sector area.

However, with the backing of prime minister's office (PMO), Shourie had his way in regard to contentious decisions over VSNL and IBP where there was enough resistance from Communications Minister Ram Vilas Paswan and Petroleum Minister Ram Naik.

The government, on its part, has listed three sectors of defence, railways and atomic energy as the strategic areas where the government would retain its monopoly.

There was enough indication in the Economic Survey that the government was serious about privatisation. ''Accelerated privatisation of the competitive segment of the public sector should serve in stimulating industrial growth,'' the Survey had stated.

UNI

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