India Inc for Rs 25,000 cr selloff target

India Inc has asked the Centre to raise the disinvestment target to at least Rs 25,000 crore in the 2005-06 Budget.

Corporates and certain economists are of the view that divestment proceeds should be used to restructure public sector units and not just to raise revenue.

"The disinvestment programme should be quickened," was the Confederation of Indian Industry's reply to a questionnaire sent by PTI.

Similarly, other industry chambers like the Federation of Indian Chambers of Commerce and Industry (Ficci) and Associated Chambers of Commerce and Industry (Assocham) said the disinvestment programme should be speeded up.

Ficci said the proceeds should go to a fund dedicated to the socio-economic development of rural India. It said the government should sell off 74 per cent equity in non-strategic profitable companies, and 49 per cent in the case of strategic companies.

Assocham said it would welcome any move to increase the disinvestment target and offload equity in state-owned enterprises, particularly the profitable ones, adding it would help the Centre to rein in the ballooning revenue deficit.

Stating that disinvestment was a "tricky and politically sensitive issue", the National Council for Applied Economic and Research said disinvestment should be quickened and widened but there should be a negative list and for the  rest of the companies, the initial public offering route should be selected.

Another economic thinktank, the Institute of Economic Growth, said disinvestment should be used for restructuring of public enterprises and "not for revenue realisation".

Opposing the current disinvestment programme, which according to the IEG was centred around revenue realisation, it said the government should sell loss-making and non-merit good PSEs and bring back capital to improve infrastructure and technology in existing public sector enterprises.

The current stream of disinvestment was "not improving the public enterprise, as a result, lucrative PSEs were sold to private hands and loss-making ones remained with the government," it said.

Credit rating agency ICRA said over the years, the disinvestment proceeds had been used by the government to cover the revenue-expenditure mismatches and to that extent, the disinvestment of government enterprises may be necessary in reducing the fiscal gap.

The National Institute of Public Finance and Policy said most enterprises where the government did not have a legitimate role should be privatised and in case of others significant disinvestment should be made to enhance public accountability and competition.