Budget 2001: A Primer

The Opposition, however, staged a walk-out in the midst of Mr Shourie'sreply on the plea that the minister was dwelling on peripheral issuesignoring the serious ones. The walk-out was led by Dr Manmohan Singh, whointervened during Mr Shourie's reply to say that the country will gobankrupt in five years if the government persued the disinvestment in themanner in which it was doing.

Replying to the day-long debate, Mr Shourie reiterated that the governmenthad got the best price for Balco given the scenario that the company'sprofitability was heading downward with each passing year. He reeled outstatistics to show that barring 1996, when aluminium prices soaredinternationally, Balco's profit had been going down. That was the reason whythe disinvestment commission had advised for immediate disinvestment inBalco, Mr Shourie said.

Defending the valuation method, Mr Shourie said the appropriate method forvaluation of a going concern was the method of discounted cash flow. Afterit was followed, the government, for abundant caution, had also asked theadvisors to assess the value of the company by two other universallyrecognised methods. According to Mr Shourie, for 51 per cent of the equity,the advisors placed the valuation through discounted cash flow method at Rs332-507 crore; through the comparable valuation method at Rs 299-464 croreand through the balance sheet method at Rs 305-348 crore.

The minister said only the government approved valuers did the job. Ascreening committee of Balco selected PV Rao and Co through competitivebidding for valuing the land and buildings, and plant and machinery. Themines were valued by experts from the Indian Bureau of Mines. The value ofthe assets was placed around Rs 1,072 crore, 51 per cent of which would bearound Rs 547 crore.

Refuting allegations of bribery in the deal, the minister said the report ofthe evaluation committee was vetted by the inter-ministerial group headed bythe mines secretary and the core group of secretaries, which is headed bythe cabinet secretary. They considered the report and endorsed it, headded.

The minister said that in accordance with the procedure, once thetransaction is completed, all documents and papers relating to the Balcodeal will be submitted to the CAG for a thorough assessment and later placedin Parliament.

Intervening during Mr Shourie's reply, Dr Manmohan Singh said his party didnot oppose disinvestment as such. What it opposed, however, was the mannerin which the entire process was being pursued. He demanded a probe by ajoint parliamentary committee to oversee the disinvestment. Most of theopposition speakers, including the left party MPs, demanded the same.

Charging that the present government was pursuing the disinvestment as asoft option to raise resources, Dr Singh said the country would go bankruptin five years. He said the revenue as well as the fiscal deficit were risingsteadily and that this forebode ill for the country.

Mr Shourie said Balco had obsolete technoloy, inadequate supply of ore whosereserves were depleting and that it needed urgent modernisation. He said thecompany stood nowhere in terms of its rivals. He suggested that thedisinvestment was, therefore, the best option before the government. Amongthe MPs who took part in the debate included Mr Kapil Sibal, Mr PranabMukherjee (both Cong), Mr Ram Naresh Aggarwal and Mr SS Ahluwalia (BJP), MrRK Anand (JMM), Mr Dipanker Mukherjee (CPI-M), among others.