The Telegraph
Since 1st March, 1999
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‘Healthy’ selloff debate devours Rs 40000 crore

Bangalore, Dec. 8 (PTI): Union disinvestment minister Arun Shourie will make a statement tomorrow on oil sector selloff, a decision that was “stayed” for three months, ministry secretary Pradip Baijal said today.

Baijal pointed out that a consensus was reached last week at an informal meeting of the Cabinet Committee on Disinvestment (CCD).

He noted that the decision to opt for a three-month pause in disinvestment had been taken when the committee took up the proposals for the strategic sales of HPCL and BPCL on September 7.

Disinvestment proceeds in the current financial year have been around Rs 3,500 crore, Baijal said and ruled out the possibility of meeting the Rs 12,000-crore target for 2002-03.

“If you have road blocks and if you have a three-month stay for political debate, you can’t reach that target,” said Baijal, who earlier chaired a session on disinvestment at a round-table organised by the National Law School of India.

Baijal, however, hastened to add: “In a democracy, political debates are very important. I am not at all apologetic about political debates. The debate was very healthy.”

He indicated that the government would go ahead with the controversial disinvestment of Nalco. “There is no decision to stop Nalco disinvestment,” Baijal said.

Speaking on the impact of the three-month stay on disinvestment, the secretary said the government has “lost about Rs 40,000 crore” as the market capitalisation of listed public-sector enterprises (PSEs) has fallen steeply.

Baijal favoured quick privatisation of MTNL and BSNL.

He cited Steel Authority of India Limited (Sail) as a classic example of a public-sector enterprise losing profitability when liberalisation forced it to compete with imports and domestic private sector steel manufacturers.

Baijal said VSNL, too, was under tremendous competitive pressure though it faced no fiscal threats after it had been privatised.

However, he replied in the negative when asked later if MTNL and BSNL were being listed for disinvestment and said it was for the Cabinet to take a decision.

On foreign direct investment, efficiency and economic growth, the secretary said China’s competitiveness has been enhanced by large-scale privatisation of state-owned enterprises and rationalisation of the labour force, which began in 1995.

“More than 30,000 companies have been privatised and about 50 million workers have been laid off since 1997. They have been given VRS at terms which are three to five times worse than the terms for VRS in India”, he said.

Baijal flayed critics questioning government moves to disinvest profit-making companies saying they are not making sufficient profits and not giving adequate returns to taxpayers and investors.

“Privatisation can yield 20 to 60 per cent times return…to both tax-payers and investors,” Baijal said.

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