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Journalism of Courage
NEW DELHI, Sept 26: Disinvestment Commission chairman G V Ramakrishna has said that financial institutions are inclined to support his proposal for setting up a non profit shareholding trust to help government in its divestment exercise in select Public Sector Undertakings (PSUs).
"The FIs think it’s feasible, workable … a better idea," he said in an interview to a private TV channel. Ramakrishna, however, declined to reveal the names of the interested financial institutions but said he had spoken to them.
Ramakrishna, a seasoned bureaucrat, has served on several government assignments ranging from being the petroleum secretary to planning commission member and heading the market regulator SEBI.Recently, he came out strongly against finance secretary Vijay Kelkar’s proposal to set up a non government body, special purpose vehicle (SPV), to conduct disinvestment in central public undertakings.Ramakrishna objected to the SPV route on two counts. First, it would borrow money from the government to pay forshares it was buying from the government. Financially, it is a very inefficient way of raising resources.
GVR said if the govt retained 49 % of a PSU’s shares after transferring the excess shares to the SPV, it would effectively still be running the company as the single largest shareholder.But if the government’s holding falls below 51 %, it will no longer be called public sector, so it would not be subject to the usual checks and balances, he said.Terming the SPV route as a subterfuge, he said there should be a more transparent system. "If you want to get companies out of the PSU, do that in a more straight-forward manner. That’s what I have said in my proposal," he said.
"Don’t do it in the subterfuge of just bringing down shareholding to 49 per cent and leaving that in the hands of the ministries," he added.
Even if the financial institutions extend support to the proposed trust, it is not clear whether they will chip in big funds.
