Govt drops Concor GDR issue

Asked whether the UTI Millennium scheme would be delayed, the finance minister said quot;I see no reason on why the scheme should be delayed. It would come in this year.quot;

quot;We are trying to initiate the reform process in the public sector companies as quickly as possible so that we do not have any pending proposals before us,quot; Sinha said.

The pricing of the issue is currently being debated between the government and investment bankers. The bankers do not wantthe issue to be priced too high for they have to make a high provisioning if the price drops.

Earlier, speaking at the inaugural address at the conference, Sinha said hidden subsidies can not go on forever as they are a hurdle in building infrastructure in the country. Subsidies to a large extent have created the resource crunch we are confronted with at the moment, he added.

The government is currently grappling with this problem, bringing the Infrastructure Development Finance Corporation at par with other FIs is an effort to bridge the resource gap, he said. Subsidies should be upfront so that the government clearly knows how much is the outgo from the budget, Sinha said.

In the current set-up it is impossible to fathom how much the government is paying to which segment of consumers, he said.

It is because of a high-level of subsidies that fresh resources have not been generated and there has been a resource problem for creating fresh infrastructure, he said. Over the years tall promises have beenmade about providing certain services free, he said.

As a result of such economically unviable promises the government has either not been able to provide the service at all or been able to provide services of very poor quality, he underscored. A dual price structure for certain services needs to be considered, he said. Electricity and other services could be supplied at different prices to different strata of society, he suggested.

Regulatory authorities in different areas are necessary to get the price administration right for various infrastructure areas. The fact that the government has been able to set-up a central regulatory authority and state level regulatory authorities for electricity is an achievement that needs to be recognised, he underscored. Regulatory authorities are essential as it is only through these bodies that disputes can be resolved.

Investment bankers expect the price to be around Rs 260. Though the expected price is well short of the ruling market price of Concor, investmentbankers feel it8217;s a fair enough range considering the dismal conditions in the capital market.

quot;There were only Rs 110 crore worth of new issues this year which has witnessed a dramatic fall in market capitalisation. Even the Reliance scrip went below Rs 100 on Tuesday. The government has finally taken a pragmatic stand,quot; top investment banking sources said. The decision to go ahead with Concor disinvestment is in tune with finance minister Yashwant Sinha8217;s repeated assertions that the PSU sell-off will take place on schedule irrespective of the market conditions.