Achieving current fiscal disinvestment target a tough task

Inter-ministerial differences, trade union protests and unfavourable market conditions have left the government's PSU

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disinvestment programme high and dry prompting Prime Minister Manmohan Singh to intervene to speed up the process to achieve the Rs 40,000 crore target through this route.

The government's ambitious disinvestment target for 2013-14 was left stranded after few initial PSU stake sales. Besides, works on setting up the Exchange Traded Fund (ETF) also kept the disinvestment department busy.

The government so far managed to garner about Rs 3,000 crore through stake sale in six companies to meet Sebi's listing norms and another Rs 1,600 crore through disinvestment of Power Grid Corporation in December.

The drive of the disinvestment department to move ahead with its plan to raise Rs 40,000 crore was often neutralised by the desire of the administrative ministries to get better valuation and better price for the shares of the companies put on the block.

Starting with MMTC, in which the government divested 9.33 per cent stake, the Finance Ministry had to do a lot of leg work to convince its Commerce counterpart to agree for the stake sale which raked in Rs 572 crore to the exchequer.

The 10 per cent stake sale of Indian Oil Corporation (IOC) is still hanging fire as the Petroleum Ministry believes the time is not right for disinvestment of the oil major.

With its oil counterpart putting its foot down on disinvestment plans, the Finance Ministry had to initially abandon planned overseas roadshows for IOC stake sale in October.

The roadshows later resumed, but the Finance and Oil Ministries are still not on the same page for disinvestment of the company.

As the year draws to a close, the Finance Ministry is still staggering to raise the budgeted Rs 14,000 crore through residual stake sale in PSUs.

The Mines and Finance Ministries are at loggerheads over the mode of sale of government's residual stake in Hindustan Zinc and Balco, and the opinion of the Law Ministry was being sought.

While the Mines Ministry feels the Metal Corporation Act should be amended before going ahead with the stake sale, the Finance Ministry thinks there is no need for the amendment and the sale can happen through the auction route.

The government, which currently holds 29.5 per cent stake in HZL and 49 per cent stake in Balco, is looking at exiting the two firms in which Anil Agarwal-led Vedanta Group holds the majority stake. The government had sold controlling stake in these companies between 2001-2003.

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