The Telegraph
Since 1st March, 1999
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Strategic sales of PSUs cleared

New Delhi, Nov. 15: A crucial meeting of the committee of secretaries on disinvestment has decided to go ahead with strategic sales in about nine public sector units, including Cochin Shipyards, Hindustan Cables and Manganese Ore India Ltd.

The disinvestment department wants to push its recommendations on strategic sales through a Cabinet committee meeting slated for next week. What is worrying the department is that the meeting was originally called to decide whether the government should go ahead with strategic sales or not.

However, disinvestment department officials are hoping that an informal meeting called by deputy Prime Minister L.K. Advani prior to the Cabinet committee meet will thrash out a compromise formula that will allow strategic sales to continue.

Top officials said they would like to push through the committee of secretaries’ recommendations “so as to get things moving on the ground”.

However, it is to be seen how well this goes down with the anti-disinvestment group within the Cabinet. Defence minister George Fernandes has already made it clear that he is not happy with attempts to discuss anything beyond policy questions.

The defence minister has been leading the war against strategic sales, arguing that it is tantamount to “handing over entities created with the wealth of the people to further enrich the already rich”.

Fernandes, in a strongly-worded letter to Prime Minister A.B. Vajpayee, had warned: “The message going out to the people is that our government is selling away the nation’s wealth.... This will hurt us politically.”

He and many others have been arguing in favour of equity sales in small lots to the public, turning PSUs into board-managed companies as has been done in several countries, including the UK and France.

The secretary-level meeting held yesterday also cleared strategic sales of the Hindustan Teleprinters, National Instrumentation Ltd, Hindustan Organics, Nepa Ltd, Hindustan Shipyards and Central Inland Water Transport Corporation.

Another strategic sale, that of the Shipping Corporation of India, has hit a deadlock with shipping minister and Vajpayee’s close confidant Ved Prakash Goyal indicating that the sale may be delayed.

The disinvestment department’s decision to go in for this mega-clearance for strategic sales comes in the wake of their being able to successfully place for tendering a strategic sale of 51 per cent in the state-run Fertilisers and Chemicals Travancore Ltd.

Although there were murmurs of protest from the fertiliser department, no serious opposition has come out in the open, unlike the case with Nalco. The department had tried to sell Nalco in the teeth of opposition from mining minister Uma Bharti and Orissa chief minister Naveen Patnaik. However, it was stymied in its efforts when a group of labourers supported by local politicians roughed up a team from Hindalco which had gone to the Orissa-based aluminium giant for a due diligence.

The government then decided to go slow on the sale as most global bidders expressed their inability to send due diligence teams till the Centre guaranteed total safety.

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