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PM likely to OK 10th Plan's Rs 78,000-cr selloff target

Amid the ongoing controversy over divestment, the full Planning Commission under the chairmanship of Prime Minister Atal Bihari Vajapyee will meet on Saturday to approve the Tenth Plan document, which envisages raising Rs 78,000 crore (Rs 780 billion) from the sale of government equity in public sector units.

The draft document, which has set an eight per cent GDP growth target during the five-year period of 2002-07, has identified privatisation of non-strategic public enterprises as a crucial area to push ahead with reforms.

Deputy Chairman of the Commission K C Pant on Thursday had a crucial meeting with Vajpayee on the preparations for the Tenth Plan.

"The policy of divestments of public sector undertakings should be pursued so as to enable the realisation of Rs 16,000 crore (Rs 160 billion) per annum to finance the plan," the Planning Commission said in its draft paper.

Achievement of the Rs 78,000 crore target would require a mop up of at least Rs 16,000 crore every year. The government in the current fiscal has so far been able to collect a mere Rs 3,000 crore (Rs 30 billion) by way of privatisation.

Pant is, however, confident that the ambitious divestment target could be achieved and brushed aside differences within the government on divestment issues including that on oil sector saying "some differences are bound to be there in a coalition".

"There is no reason for me to make that assumption (that the target would not be achieved). The government has adopted a clear-cut policy on divestment, and I have no reason to doubt that," he said earlier this week.

Planning Commission sources pointed out that the plan outlay has not been directly linked to the accruals of FDI and divestment and in case of a failure to meet the desired target of Rs 16,000 crore and $7.5 billion annually, the Plan document contained inbuilt mechanism to take care of the situation.

The Planning Commission is expected to emphasise that the finance ministry needs to tighten up revenue administration rather than cut down developmental programmes during a phase where social development has taken paramount importance.

Sources said a fresh look at the fiscal policy was the only option for the finance ministry as almost everything possible under the monetary policy has already been implemented.

Restructuring of the public sector portfolio currently under process will not have any major implication on the employment generation as contrary to global trends India has only a nine per cent employment in the organised sector and hence any employment generation strategy will have to heavily bank on the informal sectors such as agriculture, tourism and infrastructure.

Prime Minister Atal Bihari Vajpayee highlighted this aspect when he said that "rural development, driven mainly by the growth of agriculture and agro-industries, has to make a big contribution" for achieving the eight per cent GDP growth target set for the Tenth Plan.

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