Narendra Modi agenda: Strategic sales of PSUs, infra push on the cards

Written by fe Bureau | New Delhi | Updated: May 29 2014, 16:29pm hrs
InfraPMO looks out for states, to be more sensitive to their needs
Displaying a sense of urgency in imparting momentum to the various sectors of the economy and vowing to place states at the centre of action, the Narendra Modi government on Wednesday set in motion a host of short-term plans. Indications are that difficult reforms like strategic sales of PSUs would also be attempted without delay.

In keeping with the BJP's poll manifesto and expert opinion that centralised planning amounted to negation of federalism, the Prime Minister's Office (PMO) stated on the second day of the new government that issues raised by states would be addressed on a priority basis and with sensitivity, given that the country's development process relied on the progress made by states.

Separately, finance minister Arun Jaitley asked for a briefing from the revenue department on how to speed up the implementation of goods and services tax (GST), the pending indirect tax reform widely endorsed to be a game changer in Centre-state revenue sharing. Revenue secretary Rajiv Takru is expected to make a presentation to Jaitley on the subject on Thursday.

The disinvestment department, on its part, told the minister of the need to set the ball rolling for divesting the residual stakes in two PSUs Hindustan Zinc and Balco an issue long mired in legal tangles, and identifying a host of sick public sector undertakings for disinvestment.

Officials in the coal ministry advised new coal and power minister Piyush Goyal the much-delayed privatisation of commercial coal mining could not wait longer given the demand-supply mismatch for the fuel would touch an alarming 270 million tonnes by 2016-17.

In a presentation to Goyal, which would soon be put before Prime Minister Narendra Modi also, coal ministry officials highlighted a list of measures including expeditious completion of work on three critical rail links for coal evacuation and lifting of the Comprehensive Environment Pollution Index-imposed moratorium on mining from three coalfields at Singrauli, Jharsuguda and Chandrapur.

A larger and more holistic blueprint of reforms the government wants to undertake would get clearer in the next few days. On Thursday, transport minister Nitin Gadkari is slated to take charge of his office and announce measures to revive the roads and highways sector. Civil aviation minister Ashok Gajapathi Raju Pusapati is also slated to assume charge on Thursday and all eyes would be on how he plans to revive the ailing, state-owned Air India.

Telecom minster Ravi Shankar Prasad, who was apprised of the developments in the sector after the unearthing of the 2G scam on Wednesday, reiterated that creating a broadband highway would be on top of his agenda.

Also, in the next few days secretaries of the various ministries would begin making presentations about their plans regarding correcting the wrongs of the past in their respective sectors.

It remains to be seen if the NDA government would revive the disinvestment through strategic sale route (FE had reported earlier that the disinvestment department is not averse to the idea). The idea of the government bringing down its stake to less than 51% in PSUs or selling them entirely was attempted during the previous NDA government's regime which saw privatisation of a host of PSUs like Maruti, VSNL, Centaur Hotels, etc. Though Modi had said in the run-up to the elections that his first priority would be to professionalise PSUs, there are several of them that are beyond redemption.

Disinvestment secretary Ravi Mathur on Wednesday made a presentation before new finance minister Jaitley articulating the need for completing the residual stake in HZL and Balco and identifying sick PSUs for divestment. During his 45-minutes presentation, Mathur presented two options before the minister either carry on with the UPA's practice of selling 5-10% minority stakes in PSUs, or revert to the NDA's 1999-2004 version of strategic stake sales.

Although Mathur did not name any potential targets among sick PSUs, a senior finance ministry official said that the process of identifying such companies will begin later this week. The official also added that the starting point for the exercise will be the list of 'sick' PSUs drawn up by the department of public enterprises in March 2013. It is likely that MTNL and BSNL, which have been posting losses for more than three years now with the former having eroded its net worth, also figure in the list.

We will go ahead with appointing valuers for HZL-Balco stake sale. I cannot give a time frame for the stake sale. The interim Budget had a provision for Rs 1,500 crore for the sale of loss-making PSUs, but we are yet to start the process of identifying the PSUs. We have to start the process, Mathur told reporters. We apprised the finance minister of the current policy. He wanted to understand how the last minority stake went through, he added. Some of companies on the list for disinvestment are Air India, HMT, Hindustan Shipyards, National Textiles, Bharat Coking Coal, and Eastern Coalfields.

According to the interim Budget, the disinvestment proceeds have been pegged at Rs 36,925 crore and another Rs 15,000 crore from stake sale in HZL and Balco.

Modi on Thursday held his first formal meeting with PMO officials and laid emphasis on leveraging modern technology and developing systems and processes for effective monitoring and resolution of issues which are brought to his office.

The PMO promise of being sensitive to states is significant given the grievances among various states, especially those ruled by regional parties, over the alleged lopsided policies of the Centre. In recent years, states such as Andhra Pradesh and Bihar have sought special category status to get a higher share of central funds. Other like West Bengal and Uttar Pradesh have been demanding special financial packages to tide over financial problems. In the interim Budget for 2014-15, the UPA-II government attempted to sooth states' concerns by almost trebling the central assistance (the amount of budgetary support that goes directly to state treasuries) to Rs 3.39 lakh crore for 2014-15 from a revised estimate of Rs 1.19 lakh crore last fiscal. The Planning Commission also relaxed the norms for using central funds by states.