FM rules out cross-holding to achieve divestment target

The Cabinet Committee on Disinvestment also decided to dilute government stake in Indian Oil Corporation, Videsh Sanchar Nigam Ltd, Hindustan Zinc Ltd and Hindustan Latex, Madras Fertilisers Ltd besides privatisingIndian Tourism Development Corporation. Sinha said that the government had taken recourse to cross-holding last year due to the views made by the Disinvestment Commission. The Centre had mopped up Rs 6,190 crore during the last fiscal as against the target of Rs 5,000 crore mainly due to cross-holding by oil PSUs. To attain the disinvestment target during the current fiscal, the government has planned off-loading of its 19 million shares of MTNL and 180 million shares of GAIL in domestic and international markets.

The government had also decided to disinvest equity in the India Tourism Development Corporation (ITDC) up to 74 per cent which amounts to a strategic sale of the corporation. In Hindustan Zinc, 25 per cent of government equity would be divested to bring down its stake to 51 per cent.

In Madras Fertilisers, government stake would be brought down to 26 per cent from 32.74 per cent through strategic sale. For GAIL, government had decided to off-load 210 million shares last year, but could divestonly 30 million shares. The remaining 180 million would be divested this year to bring down government equity to 62 per cent from the present level of 92 per cent.

While in Indian Oil Corporation, five per cent of government equity would be divested through GDR and domestic market, in VSNL one million government shares would be sold through retail offering in domestic market. Last fiscal the government had realised only Rs 1,000 crore through disinvestment in the wake of bearish conditions in the domestic and international markets.

But after the decision to allow cross-holding of equity in cash-rich oil companies (Indian Oil, Oil and Natural Gas Corporation and GAIL) government realised more than the target set for 1998-99.

Sinha also favoured creation of public sector undertakings (PSUs) in fresh areas and handing over their management control to private sector through the build operate and transfer (BOT) route for making them globally competitive. "We would create profitable PSUs, dispose them off andmove on to create more such enterprises. Government role should be of BOT," Sinha said inaugurating a seminar on "public sector in transition" here.

"It is my view that the government should not be in the business of running PSUs for the sake of running them. Government must move on and its role should be to create new assets," he said. He, however, said that capital generated through the selling of PSUs shares should not be merely used for covering up revenue deficit but for the creation of new PSUs run in a professional and commercial manner. On revenue collections, the minister expressed confidence that the collections would remain buoyant during the current fiscal. "The revenue collections so far have been good and we have registered a 21 per cent growth in indirect tax revenue and 13 per cent growth in direct tax collections during the first three months of current fiscal," he said.

While the excise collections from April to June this year was recorded at Rs 12,663 crore, a 29.5 per cent growth, thecustom collection posted a 12.1 per cent growth at Rs 10,489 crore.

Meanwhile, official sources said the buoyancy in the revenue collection was mainly due to sustained growth in the excise revenue that signalled revival of the industrial sector and pushed up demand for imports, leading to higher customs revenue collections as well.

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