Centre, states asked to prepare plan for stake sale in public sector companies.
The government can raise Rs 3,81,000 crore over the next five years from divestment of stake in unlisted public sector undertakings (PSUs) and by reducing stake in listed PSUs and public sector banks, according to the Thirteenth Finance Commission.
While suggesting that disinvestment proceeds of the central government should be parked in the Consolidated Fund, the commission has asked states to draw a road map for closure of non-working PSUs by March 2011.
According to the Commission, the market value of the unlisted PSUs is estimated at Rs 3.5 lakh crore. Assuming divestment of unlisted PSUs from the present holding of 96.79 per cent to 90 per cent to enable them to be listed, an amount of Rs 24,000 crore would be unlocked. Also, listing of these enterprises would enhance their quality of corporate governance. Further, for listed companies, divestment from the present holding of 84.73 per cent to 51 per cent could imply additional resources of approximately Rs 3,41,000 crore.
Similarly, for banks, bringing down the government share from the existing 60 per cent to 51 per cent would entail a resource availability in the vicinity of Rs 17,000 crore. Thus, an approximate amount of Rs 3,81,000 crore could become available to the government. Assuming that this is pursued over five years, till 2010-15, this would provide resources to the tune of 0.88 per cent of the gross domestic product every year on an average.
The report has emphasised liberalisation of the policy regarding use of proceeds from disinvestment to include capital expenditure on critical infrastructure and environment. Disinvestment increases non-debt capital receipts and assuming all other factors remain same, it allows the government to increase its capital expenditure without impacting the fiscal deficit.
“We recommend that transfer of disinvestment receipts to the public account, as has been the practice in the past, be discontinued and that all disinvestment receipts be maintained in the consolidated fund. This will enable the use of these funds to be decided as part of the medium-term fiscal planning exercise,” the report has said.
In addition, the commission has recommended that to improve the quality and transparency of disinvestment, the government should list all public sector enterprises that yield a lower rate of return on assets than a norm to be decided by an expert committee.
This disclosure should be made annually and placed before Parliament along with the budget documentation.
The state governments should actively consider withdrawal or reduction of state PSUs in non-welfare and non-utility sectors. There is an immediate need to reduce the number of state PSUs as most of these enterprises promote inefficiency due to lack of proper monitoring by the state governments, the report has said.
