The ultimate responsibility of ensuring that the government meets its disinvestment target of Rs 40,000 crore may fall on a new company, which will be created by dissolving the Specified Undertaking of UTI (SUUTI).
A senior finance ministry official said on Friday such a move was now under the “active consideration” of the government. Even so, “no final decision has been taken on the mode that will be applied to meet the disinvestment target”, he told Business Standard.
The entity that is proposed to be formed after dissolving Suuti would “work like an asset management company”, which will buy and sell shares.
“The idea at present is that the company, after its creation, will pledge shares of the companies held by SUUTI. It will buy government stake in the public sector companies by taking loan on the pledged shares,” the official revealed.
This will allow government to perk up this year’s disinvestment revenue, which is languishing at Rs 1,144 crore up till now. It will also check a major slippage in the fiscal deficit target of 4.6 per cent of the GDP.
“The market condition would decide the exact amount of revenue which the government would be able to raise through this route,” the official said, but declined to give any details on the exact numbers that the government was working on with regard to the pledging of shares.
When the market conditions will improve, the new company will sell shares in the public sector companies and invoke the pledge on SUUTI shares. The leveraging of shares held by the erstwhile Unit Trust of India, now warehoused in Suuti to raise resources, is one of the options considered by the government along with share buyback by the companies and also cross-holdings.
Pledging shares and assets available with SUUTI to raise funds and then using the resources to buy back shares in public sector companies was among the options suggested earlier by ICICI Securities to meet the disinvestment target.