Provision made to transfer the proceeds from divestment to the National Investment Fund
Though Finance Minister Pranab Mukherjee waxed eloquent on the need for more retail shareholding in public sector undertakings, the budget has provided for only Rs 1,120 crore from disinvestment in 2009-10.
The Economic Survey for 2008-09, tabled in Lok Sabha late last week by Mukherjee, had talked of raising up to Rs 25,000 crore every year from disinvestment.
“The public sector undertakings are the wealth of the nation, and a part of this wealth should rest in the hands of the people,” Mukherjee said in his speech.
But he hastened to add that the government would retain at least 51 per cent equity in these enterprises and would always keep the banks and insurance companies under its control.
Analysts and disinvestment experts said the statement reflects the government’s intent to offload a part of its stake in companies owned more than 90 per cent by it and listed on the stock exchange – MMTC, NMDC and Hindustan Copper, among others.
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The finance minister said that the average public float in Indian listed companies is less than 15 per cent. Mature markets, which have adequate depth and cannot be manipulated, require larger and diversified public shareholdings.
This requirement should be uniformly applied to the private sector as well as listed public sector companies, he added.
Provision has been made to transfer the proceeds from disinvestment to the National Investment Fund.
This professionally-managed fund will invest in select public sector mutual funds for sustainable returns without depleting the corpus.