New Delhi, Aug. 31: After backtracking on divestment because of strong Left opposition to the sale of navratnas, the Centre wants to kickstart the process again.
Later this week, the cabinet committee on economic affairs (CCEA) will consider a proposal to sell to financial institutions an 8 per cent stake in Maruti Udyog. The government owns about 18 per cent residual shares in the Gurgaon-based carmaker.
The stake sale is expected to be followed by the maiden offer of Indian Airlines and Air-India and an equity flotation by Syndicate Bank.
The government has decided not to touch navratna PSUs for the time being because of the stiff opposition from the Left but to continue with small stake sales in profit-making PSUs. The Maruti stake sale will be the first divestment by the government after being stonewalled by the Left on plans to sell a part of its holding in state-run Bhel.
The idea is to send out a clear message that divestment is not dead despite differences within the ruling alliance over it. The Maruti residual stake sale has been chosen carefully as it is not expected to raise the ire of the Left or other allies.
Top officials said initially the committee of secretaries had toyed with the idea that the sale could be to FIs at a negotiated price but later reframed the cabinet note seeking to sell the chunk valued at over Rs 1,100 crore, through the book building process.
A white paper on divestment framed by the finance ministry asserts that the bookbuilding process is more transparent than the other modes that have been used in the past.
The government had offloaded 25 per cent in Maruti through a book-built issue in 2003 at Rs 125 a share. The stock is being traded in the range of Rs 460 to 470, and touched a 52-week high of Rs 504 some time back.
Officials said the government wishes to retain a 10 per cent stake for the time being as it is keen to retain a nominee on the Maruti board. The government is keen to push the divestment programme forward as it realises it is short of funds for its flagship projects.
Officials are banking on extra budgetary schemes like divestment to fund basic education and healthcare bill so that more money can be diverted to the rural employment safety net.