In a significant move, the government on Wednesday indicated that the disinvestment process is about to get back on track. Speaking on the sidelines of a conference in Mumbai, Finance Minister P Chidambaram hinted that the government is mooting disinvestment of small tranches of equity in ‘non-navratna’ profit-making public sector enterprises.‘‘We have had discussions about disinvesting small portions of equity in selective profit-making public sector enterprises other than the Navratnas,’’ Chidambaram said.Timed with the visit by US treasury secretary John Snow, who is here to push for sweeping financial sector reforms, the government today also decided to allow foreign direct investment (FDI) of up to 49 per cent in asset reconstruction companies (ARCs).ARCs buy out non-performing assets from banks and try to extract value from these assets. Now, foreign banks and ARCs could enter the Indian NPA market. The FIPB would consider applications from interested foreign entities that want to invest in ARCs registered with the Reserve Bank of India.RBI will shortly come out with a notification under the Foreign Exchange Management Act for FDI in ARCs. While no investments will be allowed by Foreign Institutional Investors (FIIs), the government would review this FDI policy in two years.Chidambaram’s statement comes a week after the Cabinet Committee cleared the establishment of the National Investment Fund, where proceeds from disinvestment are to be parked and whose income is to be used for funding social sector projects and reviving ailing PSUs. Prakash Karat, CPM general secretary, had also recently stated that sale of shares in non-navratna PSUs can be discussed. The FM also said the rupee’s recent movement had been orderly and that the country’s record high trade deficit was not a cause for worry. “The rupee has moved both ways. As we have always said, orderly movements both ways is acceptable,” he said.
