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Mopup blows away fiscal worries
- Institutions bid heavily for public sector shares; ONGC continues with its success run

New Delhi/Mumbai, March 8: With the Centre expecting to mop up Rs 13,500 crore from the ongoing public issues, the government hopes to contain its fiscal deficit at the projected 4.8 per cent of GDP in 2003-04.

The government is offloading its stake in six public sector companies — ONGC, Gail, IPCL, IBP, CMC and Dredging Corporation.

“Nearly Rs 13,500 crore will be mobilised through public offers,” said Vijay Kelkar, adviser to the finance minister, at the 14th Insurance Congress of Developing Countries, organised by General Insurance Corporation. State-owned institutional investors, including Life Insurance Corporation and GIC, have bid heavily for the PSU shares.

“We have bid for more or less 15 per cent of the public offers. In ONGC alone, we have bid for shares worth Rs 1,000 crore. Our bids will touch Rs 2,000 crore in all companies taken together,” said LIC chairman S. B. Mathur.

ONGC continued its dream run today with a subscription four times its offer size. The Petronet issue was oversubscribed 1.12 times today. Power Trading was oversubscribed by over 18.74 times. The success of these offers has sparked a fresh interest among small investors, who are expected to trickle in with late bids at cut-off prices, said merchant bankers.

A confident Arun Shourie said in Singapore, “Divestment is not a timing decision based on day-to-day market mood but a long-term call based on broader macro-economic objectives.” He added, “Most of the impediments to privatising PSUs have been addressed and the programme is expected to gather momentum as the consensus was now unanimous across political ideologies in deed, even if it was not yet evident in words.”

The government has so far mopped up over Rs 3,600 crore from the sale of equity in all the six state-owned companies. This is in addition to Rs 1,300 crore it has raked in from the sale of equity in Maruti and Zinc Corporation. The Centre aims to mop up Rs 10,000 crore from ONGC.

Kelkar was also upbeat about growth targets being met. “Growth is going to accelerate in the coming decade. In the last decade, the country’s GDP grew by nearly 6 per cent annually and the next two decades would witness an 8-10 per cent annual growth,” he asserted.

He said as India will double the size of its insurance business every four to five years, it will mobilise more savings, thereby turning itself into one of the fastest growing economies.

According to a report by the Central Statistical Organisation, India’s GDP is estimated to log 8.1 per cent growth this fiscal.

In the next two decades, he said the country would have the highest working population coupled with an increase in savings rate. “With the abundance of labour supply and financial capital, India will be among the fastest growing economies in the world,” he added.

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