New Delhi, July 11: Stung by the Left opposition to stake sale in Bharat Heavy Electricals Ltd, the Congress-led UPA government now wants to change its divestment strategy.
The government wants to ensure that its holding in profit-making public undertakings is way above the minimum majority holding mark of 51 per cent, even as it insists on its right to continue making public offering of equity in these firms.
The government believes it can backtrack a few steps to accommodate the objections of Left parties but an abject surrender to their demand, which it believes is outside the common minimum programme, will lead to a major loss of face.
Senior government officials said that a white paper on divestment circulated to key ministries at the instance of finance minister P. Chidambaram would be modified to include a clause, which would state that future public offerings should be planned in a manner so that the government retained a comfortable majority even after the stake had been sold in the market.
The definition of a “comfortable majority” may be between 60 and 66.6 per cent. The idea, officials explained, was to satisfy a point raised by the Leftists themselves.
Left leaders had pointed out that the common minimum programme allowed PSUs to hit the market separately with their own IPOs or fresh share issues. This could lead to a piquant situation where if the PSU floated a share issue after the government reduced its holding to a point near the bare minimum of 51 per cent, it could see its holding getting diluted below the majority mark.
PSUs where past share sale might have resulted in government holding going below the 60-per-cent-mark will thus be out of the stake sell-off loop, officials said. The government, at the current juncture, is unwilling to go further and make individual exceptions to the public offering menu it has planned.
Left leaders are unlikely to accept the new government proposal in toto and will try to ensure that navratnas are kept outside the loop.
“We have already told them that navratnas cannot be touched as far as divestment of any kind is concerned ... not once, not twice but thrice and we will stick to that,” said RSP leader Abani Roy.
The point that finance minister Chidambaram has tried to make to his cabinet colleagues, in the note on divestment he has circulated, is that out of some 100 profitable PSUs, “only 28 are currently listed. Listing on the domestic stock exchanges not only provides additional avenues to PSUs concerned to raise capital but also expose them to market discipline ... it is therefore, in public interest if all large profitable PSUs are listed, at least on the domestic stock exchanges.”