Spread issues for stake sales: Congress

Party criticises Shourie for failing to assess market sentiment

The Congress criticised Disinvestment Minister Arun Shourie for not being able to assess the market sentiment and offloading oil PSU shares without bothering about their prices and then blaming merchant bankers for pulling down the market.

The co-chairman of the party's economic cell, Arjun Sengupta, also criticised the judgment of the disinvestment minister in Centaur Hotel selloff.

"This government sold a hotel for Rs 83 crore. Within three months, the same hotel was re-sold for Rs 115 crore. Is this a sign of market reforms- that the disinvestment minister does not even have this much market intelligence?"

"I am not saying that the disinvestment minister is a dishonest man. But, this kind of thing happens only in Latin American countries - when the government and the buyer enter into a deal for disinvestment and split the difference between themselves. Shourie would never do that," Sengupta said, at a party briefing.

He said it was a matter of concern that the government came out with a raft of initial public offerings to bridge a budgetary deficit of Rs 17,000 crore.

"If the disinvestment minister had done this over a period of time, it would have been better.

The market has a capacity to absorb and when it failed to respond, the minister said it was the duty of the merchant bankers to boost the prices. He even met the chiefs of the Central Bureau of Investigation and the Intelligence Bureau. Is this the way to reform the market? "

When asked if some cartel had been working to bring the market down, Sengupta said it was difficult for brokers to do the same, but not impossible.

Sengupta also released figures to show that it was not because of the government's ingenuity that the GDP growth has touched 8 per cent.

He said during the last three years of the Eighth Plan, the GDP grew by more than 7.5 per cent.

If this trend was extended to 1997-02, the growth rate would have averaged around 7 per cent and accelerated towards 8 per cent, he added.

However, he said what was worrisome was that during the Ninth Plan the average growth rate fell to 5.48 per cent and in the last two years, the fall was even sharper.

Sengupta said during the Ninth Plan, performance fell in almost all sectors, except for the current year.

Agricultural growth fell from 4.62 per cent in 1992-97 to 2.02 per cent in 1997-02.

Manufacturing, construction and electricity from 8.04 to 4.62 per cent; and transport, communication and trade from 8.84 per cent to 7.92 per cent. Only in public administration, defence and other services, there was an increase from 5.1 to 9.1 per cent.

This was partly because of the rise in the number of government employees and the wage hikes after the Fifth Pay Commission report.

Sengupta said if the Congress came to power, it would revive economic growth and push GDP growth to 10 per cent, because "we (the Congress) are better reformers". "We know how to sequence reforms, how to design them and how to generate confidence in the economy and among the investors", he said.

He added that stability was the single most important factor in attracting investment and only a Congress government had the capacity to provide that.

Selloff tangle

• Congress criticises Centaur Hotel selloff
• Says government using selloff proceeds to bridge deficits
• Party promises to push GDP growth to 10% if it forms the next government
• Claims only a Congress government has the capacity to attract investment