Divestment body powers cut

The industry ministry has now amended its terms of reference saying, "The disinvestment commission shall be an advisory body and its role and functions would be to advise the government on disinvestment in those PSUs referred to it by government."

The department of public enterprises issued a gazette notification and informed the commission of the amendments last week, barely days after the commission assailed the government’s approach to disinvestment.

Under its August 23, 1996 , notification for setting up the commission, the government had set out twelve specific tasks for it.

These have now been replaced by a general statement that says, "Thecommission shall also advise the government on any other matters relating to disinvestment as may be specifically referred to it." The amendments also cut the monitoring role of the commission, asking it to only carry out such other activities relating to disinvestment as may be assigned to it by the government’.

At the time of inception the commission was asked to draw a comprehensive overall long-term disinvestment programme, to determine the extent of disinvestment in each PSU, supervise overall sale process, select financial advisors, and monitor progress.

It was also given the charge of overall supervision of implementing the government’s decisions by specific PSUs.

It may be recalled that an apex body of PSUs, Standing Conference of Public Enterprises (Scope), had earlier demanded a statutory status for the commission to make disinvestment a meaningful exercise to run the state-owned enterprises on commercial basis.

On its part the commission had been opposing the government’s methodology ofPSU disinvestment as a revenue mechanism to fill up budgetary deficit and had called for rechanneling the entire disinvestment proceeds to the PSUs for their restructuring.

The industry ministry, however, had questioned the commission’s authority in seeking early action from the government saying it was only an advisory body and government will take its own decisions’. Interpreting the terms of reference, the commission had said in its fifth report that it will not involve itself in the actual disinvestment process. The government had communicated to the panel that the recommendations would be processed by the finance ministry through the core group chaired by the cabinet secretary for obtaining cabinet decision.