Beginning with the Gujarat State Finance Corporation (GSFC) on February 11, the Gujarat government will start an aggressive privatisation cum divestment programme. Through these measures, the state government will seek to not only shore up its fiscal outlook in the coming years but also embark on a programme to make the public sector more efficient and accountable.
The blue-print for action was set out in the State Finance Commission report of 1994. And the actual modalities were clinched as part of the $250 million Public Sector Resource Management Loan sponsored by the Asian Development Bank.
A part of the loan proceeds would be used up in financing the voluntary retirement scheme package offered to the 14,000 workers of the Gujarat State Textile Corporation. The state government is now working out similar retirement packages for the workforce in other sick and non-viable units.
Essentially, the government has set out a four-pronged divestment policy. The first mode is closure of loss making and unviable units along the lines of what has been effected in the Gujarat State Textile Corporation. Also on the closure list are Gujarat State Construction, Gujarat Dairy Development Company, Gujarat Rural Development Corporation and Gujarat Fisheries Corporation.
The second approach is complete divestment of government stake through a strategic sale to a private promoter. The third strategy is of partial privatisation, where the government would in some cases go down below 51 per cent. The fourth approach is through mergers of units performing similar functions.
To buttress its efforts in this direction, the state government has set up a first ever State Renewal Fund. Along the lines of the National Renewal Fund created by the centre in 1991, the proceeds of this corpus will be utilised to fund VRS and also retraining of the retrenched workforce wherever it is required.
The government is also proposing to divest from the Gujarat Industrial Development Corporation. But since it is a board at present, it will first be converted into a company before the government proceeds with privatisation.
The state government has already put up two of its units
