Govt to step up disinvestment

The Government said it has decided that all profitable listed Central Public Sector Enterprises should meet the mandatory listing of 10% public ownership. In addition, all unlisted CPSEs having positive networth, no accumulated losses and having a net profit in the three preceding consecutive years should get listed on the stock exchanges. The disinvestment proceeds would be channelised into the National Investment Fund (NIF), the Government said in a statement. The corpus comprising deposits from April 2009 till March 2012 would be available in full for investment as capital expenditure in specific social sector schemes determined by Planning Commission and Department of Expenditure. The status quo ante of NIF will be restored from April 2012, it added. The President’s Address to the Joint Session of Parliament on 4th June and Finance Minister’s Budget Speech on 6th July had articulated the intention of the UPA Government to encourage people participation in the disinvestment programme. It had mentioned that CPSEs are the wealth of the nation, and part of this wealth should rest in the hands of the people while retaining at least 51% Government equity in our enterprises.

The decision, which was announced by Home Minister P Chidambaram after a meeting of the Cabinet Committee on Economic Affairs (CCEA), opens the doors for around 50 companies to get listed, prominent among them being BSNL, RITES and Ircon. Though, 18 PSUs are listed and do not comply with the mandatory 10% public float norm, about 10 such companies are profitable and will need to come out with a follow on issue. These include MMTC and NMDC, Neyveli Lignite, State Trading Corp. and National Fertilizers. The Government owns 98.38% in NMDC, 99.33% in MMTC and 91.02% in State Trading corp., according to filings to the Bombay Stock Exchange (BSE). Hindustan Copper is 99.59% government-owned, while Rashtriya Chemicals & Fertilizers (RCF) is owned 92.5% by the Government. The Government didn’t provide any timeframe or schedule of share sale. The Government's disinvestment plan may help it mobilise more resources and reduce its dependence on borrowings, economists said