Govt must go ahead with divestment to boost economy: Assocham

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Regardless of volatility in the stock market, the government must aggressively go ahead with its disinvestment plan and offload stakes in blue-chip PSUs to strengthen the economy, industry body Assocham said today.

"The best thing is to go and sell the minority stake in some of the best-performing PSUs which will also revive faith of the retail investors which has touched the lowest in the recent past," co-Chairman of Assocham's capital market council Jagannadham Thunuguntla said here.

The sale of shares in PSUs such as Coal India, Indian Oil Corporation and BHEL may be a good way to attract global money. Disinvestment can be an excellent tool from the point of view of strengthening the rupee and stimulating the capital market, he added.

The Budget has set a disinvestment target of Rs 40,000 crore for FY14.

"Of the 20-odd companies identified by the Department of Disinvestment for a 5 to 10 per cent equity sale, Coal India and Indian Oil Corp alone could fetch the government close to Rs 28,000 crore," Assocham President Rajkumar Dhoot said while releasing a report on PSUs and Disinvestment.

The rupee touched an all-time low of 61.21 on July 8. Wholesale prices rose 4.86 per cent in June compared with a 4.7 per cent increase in May.

The rupee's decline could prove to be a "blessing in disguise," Thunuguntla said.

"The rupee depreciation has made the net valuation pretty cheap for foreign investors and it might play out in favour of the Indian assets again. They (FIIs) may return with aggression in that case."

Other PSUs such as Power Grid Corp of India, Engineers India Ltd and National Hydroelectric Power Corp can also help the government raise funds in the current fiscal, Dhoot said.

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