Selloff proceeds to be spent on social sector

PSUs & DISINVESTMENT

The United Progressive Alliance government has fixed a Rs 4,000 crore disinvestment target for the current fiscal but said it would spend the funds mopped up through the sale of its equity on the social sector.

It has also announced a roadmap for revitalising public sector companies including infusion of Rs 14,194 crore into healthy entities and constitution of a Board for Reconstruction of Public Sector Enterprises (BRPSE).

Finance Minister P Chidambaram said the government would off-load 5 per cent equity in National Thermal Power Corporation.

In addition, disinvestment of remaining stakes in Balco and Maruti Udyog are planned during the year. NTPC was planning an initial public offer of 5 per cent stake in the first week of August.

Quoting the national common minimum programme, he said the government could dilute its equity and raise resources to meet social needs of the people. The BRPSE would examine the PSUs and recommend disinvestment in line with the national common minimum programme objectives.

The BRPSE will be modelled on the lines of the erstwhile disinvestment commission and will have the mandate to advise the government on restructuring of public sector companies, including proposing disinvestment or closure or sale.

In addition to the Rs 14,000 crore equity infusion the government has also lined up loans of Rs 2,132 crore to central public sector units.

Higher investments are planned for Gail and Indian Oil Corporation's petrochemical projects and Hindustan Petroleum in the oil sector. Power Grid Corporation which is setting up a Rs 80,000 crore national grid and Damodar Valley Corporation are the main beneficiaries in the power sector.

Loans and interest of Rs 528 crore to Indian Telephone Industries is proposed to be written off and an additional investment of Rs 50 crore planned.

ITI Chairman and Managing Director Y K Pandey hopes a 50 per cent higher turnover of Rs 2,000 crore this year. The company's negative bottomline to improve drastically to Rs 150 crore.

The revival package will also have an immediate impact on the debt profile of the company, with Rs 300 crore of debt being repaid, thus reducing the interest bill substantially.

The long-term effect will be through the likely reduction in staff strength from the present 15,000 crore to 13,000 crore through another round of the voluntary retirement scheme.

In case of BSNL, the government plans to reduce its investments from 10,608 crore (RE 2003-04) to Rs 8,800 crore during the year. In the civil aviation sector an additional Rs 100 crore is earmarked for the Airports Authority of India.

The coal and mines ministry had also sought Rs 800 crore during the year for revival of Bharat Coking Coal Ltd and Central and Eastern Coalfields. Indian Airlines had also sought capital infusion before going for its aircraft acquisition programme.

Loans advanced by the Centre to PSUs, railways, posts and telegraph, port trusts and municipalities are projected to increase from Rs 53,981.54 crore (RE 2003-04) to Rs 63,470.39 crore during 2004-05.