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Turf war on control of selloff spoils

New Delhi, March 16: A battle royale has broken out over the nature of the disinvestment proceeds fund to be set up as part of the budget announcements made by finance minister Jaswant Singh.

Singh and his top aides in finance ministry want the fund to be a subsidiary of the Consolidated Fund of India which will be utilised mostly for plan projects and not an independent fund to be used for targeted purposes outside the general budget.

In fact, the finance minister confirmed to The Telegraph “it (the disinvestment fund) will be a part of the consolidated fund.”

However, most of Singh’s Cabinet colleagues, many of whom are believed to be supporters of deputy Prime Minister L. K. Advani, want the disinvestment fund to be a separate entity like the steel development fund or sugar fund, which will have a totally separate account and its expenses will not be part of the general budget.

The crux of the battle is how the money will be spent.

Critics within the Cabinet said disinvestment minister Arun Shourie had promised Parliament that the proposed fund would “finance fresh employment opportunities and investment besides retiring of public debt”.

By using it to fund plan-schemes instead, there could be a breach of Parliamentary privilege besides giving the Congress-led Opposition an opportunity to turn this into an election issue where it could claim that the “country’s assets have been sold off and the money frittered away on normal government expenses”.

“The budget does not provide for paying off any huge debt burden. It has provided for retiring debt worth Rs 3,67,000 crore next year, about Rs 3,000 crore more than this fiscal’s debt retirement plan. While it has provided for borrowing almost Rs 12,000 crore more this year,” sources close to a Cabinet member pointed out.

This lack of any concrete plan to retire off old debts from disinvestment proceeds, which the finance ministry is pegging at Rs 13,200 crore in the next fiscal, besides lack of “employment generating schemes”, is what is alarming Singh’s Cabinet colleagues.

They would like this fund to aid schemes like safety nets for retrenched PSU workers or giving them loans to set up new businesses. These policies could be sold to urban voters who are believed to be increasingly critical of the disinvestment policy.

“This kind of insensitivity and juggling with promises could be politically suicidal for us ... disinvestment is a burning issue,” sources said.

Even the disinvestment ministry has been planning its programmes on the premise that a totally independent fund was being set up which would take up projects that are normally not covered by the Consolidated Fund of India.

It was understood that the disinvestment fund would be managed by an inter-ministerial committee responsible only to the Cabinet and Parliament. The asset management company being set up to manage rump shares of the companies where the government had given up strategic control to private entrepreneurs would be under the finance ministry. (Though in theory it would be an independent organisation managed by professionals who will interfere with the management of the privatised companies only if government’s equity value is hurt in any manner.)

The proceeds from big-ticket sales in well-known companies like HPCL, BPCL, Maruti Udyog and National Fertiliser will go into this fund next fiscal.

Besides the big-ticket PSUs, there are 45 PSUs where some kind of in-principle decision to divest stake has been taken either by the Cabinet or the core group of secretaries. Most of these, including Shipping Corporation of India, Hindustan Organics, Nepa, Central Inland Waterways, Chefair, a unit of Hotel Corporation, Cochin Shipyards and Hindustan Shipyards Ltd, Bharat Brakes and Valves Ltd and Hindustan Insecticides are also expected to be sold in the coming fiscal.

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