The Telegraph
Since 1st March, 1999
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Market route for divestment

New Delhi, Aug. 17: Finance minister P. Chidambaram today said the government would continue divestment through market offers even as he lashed out at the previous BJP-led regime’s penchant for strategic sales, saying the policy itself was “disputed.”

“Strategic sale is not the right way to go about divestment. It raises more questions than it answers. There are disputes from the selection of valuers to the method of valuation. The previous government has even been accused of arm-twisting banks to fund sales,” Chidambaram told reporters at the finance ministry today.

The attack on the previous regime followed comments from BJP leader and former finance minister Yashwant Sinha in which he criticised the Congress for abandoning sales to strategic investors. Chidambaram claimed the decision was based on the common minimum programme. “This does not mean we are giving up divestment. However, we prefer market offers.”

The minister, whose attempts to sell the Centre’s stake in engineering giant Bhel was blocked by the Left, said the divestment policy in case of navratnas was “under discussion” since “several objections were raised”.

Ministry officials said with strategic sales discarded as an option and stake sales in navratnas held up, offloading small chunks of equity in other profit-making PSUs in the market was the best option open for a government struggling to find resources for social plans.

Chidambaram said there was money to fund the massive Rural Employment Guarantee Scheme this fiscal but “extra cash for it would have to be found next year”.

The government has budgeted Rs 4,500 crore this year for the scheme, which the Congress and the Left want to use as example of their commitment to rural causes ahead of state elections. North Block officials, too, feel there is enough cash for the four months during which the plan will run in the current financial year.

However, money to run the scheme ' an estimated Rs 25,000 crore ' for the entire year will come from the next budget. Officials hope extra-budgetary sources, such as disinvestment, will yield enough to fund basic education and part of health care so that more cash can be diverted to the rural employment safety net being created.

To add to the worry is a new outcome budget, an initiative of the Prime Minister Manmohan Singh to monitor how ministries have spent money on programmes and what they have achieved from the spending.

That document, which has been delayed by more than a month on its way to Parliament, could end the practice of diverting money from one head to another.

At the same time, the government is trying to be more responsible with spending and is finding politically acceptable ways of shoring up revenues.

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