Finance minister P Chidambaram is set to push ahead with sale of 5-10 per cent equity in state-owned unlisted companies. Of the 242 functional central public sector undertakings (PSUs) in the country, 200 remain unlisted till date.
In an exclusive interview to The Indian Express, Chidambaram said, “Disinvesting 5 per cent to 10 per cent government holding in unlisted companies was never seriously opposed by any party, even the Left.” According to him, the initial public offers (IPOs) for the PSUs were held back because the stock market was choppy. “If the market calms down, then each of these unlisted companies will go forward with their listings,” the finance minister said.
Such non-controversial disinvestment will help the United Progressive Alliance government raise funds in a “difficult” year with economic growth forecast lowered to 8-8.5 per cent. The moneys will not only help the government sustain its flagship programmes but also keep the fiscal deficit under check.
Story continues below this ad
Certain credit rating agencies and independent think tanks have estimated the deficit to be as high as 6.5 per cent of the GDP in the current fiscal. The government requires significant moneys to meet the requirement arising out of the farm loan waiver scheme, higher oil and fertilizer subsidies and the Pay Commission award, if announced later this year.
The department of disinvestment is expected to short-list a number of PSUs that can tap the primary market in the coming months. It will seek a list of PSUs from other ministries and departments.
The finance ministry is also likely to prod state-owned companies in the core sector to tap the primary market. The Deepak Parekh committee on infrastructure financing had recommended that such companies be allowed to raise funds by leveraging their strong balance sheets. The Airports Authority of India, Dredging Corporation of India Ltd and Bharat Sanchar Nigam Ltd may be some companies that could list themselves. Even as such companies raise resources for their own investment plans through a fresh issue of shares, the government can piggyback their IPOs by selling a part of its own stake.
While work on National Hydro-electric Power Corporation (NHPC) IPO has already been initiated, the other PSUs that could be on the 5-10 per cent stake sale roster include Oil India Ltd, Rashtriya Ispat Nigam Ltd, Nuclear Power Corporation, Railtel, TCIL and Manganese Ore (India) Ltd.
3 min read
