The Telegraph
Since 1st March, 1999
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Heart satisfied, Left worries about soul

New Delhi, Jan. 27: The government today sought to give a human face to the much-maligned divestment process, but the Left could not decide whether it liked the face.

Beginning April, the proceeds from divestment will go to a fund whose returns will finance social schemes in education, health and employment.

The fund is part of the promises made in the common minimum programme (CMP). It also addresses a concern expressed by the Congress when it was in Opposition that the then BJP government was using the proceeds from divestment to reduce the fiscal deficit and paint a rosy economic picture to gain political mileage.

The noble objective and the political backdrop should have made the fund close to the Left's heart.

It has. But the source of the money for the fund ' divestment ' is something that the Left has yet to digest.

In an ironical twist ' coincidental or otherwise ' the fund was announced on a day the government also decided to defer divestment in two big-ticket companies: Maruti Udyog Ltd and Bharat Heavy Electricals Ltd (Bhel).

The cabinet decided to postpone a decision apparently under pressure from the Left, though CPI leader A.B. Bardhan said he could not recall having discussed Bhel with finance minister P. Chidambaram.

But CPM leader Prakash Karat had said that the divestment proposal was against the spirit of the CMP and would be 'strongly' opposed.

The Left leaders are now in a dilemma because without divestments in profit-making companies ' which they are opposed to ' there is little chance of the social fund drawing the huge amounts needed to bankroll the welfare projects.

The Left's official stand is the fund should be filled with proceeds from the sale of sick PSUs ' considered unrealistic by many because such bankrupt companies cannot be expected to fetch high prices.

Left leaders said they do want the fund. 'But that does not justify the divestment of profit-making PSUs,' Bardhan said. 'The government can start the national investment fund by contributing to it from the sale of bankrupt PSUs.'

The Left will take up the matter at its pre-budget meeting with Chidambaram on February 1.

The CMP is not very specific on the issue. 'The UPA government believes there has to be a direct link between privatisation and social needs ' like using privatisation revenues for designated social sector schemes,' it says.

Chidambaram, however, feels that the government is adhering to the CMP.

The finance minister insisted that the government is not violating a clause which says 'generally profit-making companies will not be privatised' because it will retain ownership control even after divesting 49 per cent of shares.

See Business Telegraph

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