Govt to net Rs 4,100 cr from divestment

The UPA government is likely to close this financial year with around a billion dollars (around Rs 4,100 crore) as receipts from disinvestment of minority shareholdings in four public sector undertakings and a complete exit from leading car maker Maruti Udyog.

The recently concluded sale of the government's residual 10.27 per cent shareholding in Maruti to public sector banks and financial institutions helped raise around Rs 2,367 crore.

Similarly, the remaining funds "" around Rs 1,700-odd crore "" are expected to be raised through sale of minority stakes in four public sector undertakings "" Oil India, National Hydroelectric Power Corporation (NHPC), Rural Electrification Corporation (REC) and Power Grid Corporation of India (PGCIL).

The sale, which will see the government ride piggyback on initial public offers planned by these firms, is expected to be completed by February next year.

"This will help mop up around Rs 1600-1700 crore through offers for sale," said a senior government official. A part of the proceeds are to be used to revive other public sector undertakings and for funding developmental programmes.

The UPA government, after it came to power, deviated from the practice followed since 1991-92 of fixing annual targets for disinvestment.The Common Minimum Programme of the alliance had in May 2004 underlined that profitable PSUs would not be privatised.

However, disinvestment of minority stakes in PSUs has been quietly, but vigorously, pursued by the finance ministry, which controls the department of disinvestment.

During the BJP-led National Democratic Alliance government, disinvestment was an independent department headed by Arun Shourie, who succeeded in privatising a number of PSUs including VSNL, Hindustan Zinc and Balco, among others.

From 1991-92 till May 2007, the central government has raised just under Rs 51,609 crore from disinvestment transactions, with the highest receipts of Rs 15,547 crore realised in 2003-04, the year the UPA government assumed office. The total target over this period was Rs 96,800 crore. 

BIG APPETITE Disinvestment transactions & realisations
Period	Budget target	Total receipts
1991-92 to 2000	44,300	18,483
2000-01 to 2003-04	48,500	26,424
2004-05 till date	4,000*	6,702
*No target fixed from 2005-06 onwards (Fig in Rs crore)

However, the entire money was raised from strategic sale and offers for sale in 10 public sector firms.

Last Thursday, the government decided to sell 10 per cent of its stake in Oil India to three other state-owned oil marketing companies. This is not the first time that the government has done this.

Three previous similar sales had realised Rs 1317.23 crore for the government.