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New Delhi: Moody's said the Indian Government's decision to sell stakes in public sector units is not a sustainable strategy and the move should be used moderately.
"Raising funds by selling stakes in state-owned companies is not a sustainable strategy," said the research arm of the agency Moody's Economy.com.
It said with the Government planning to sell stakes in state-owned companies "although raising funds from the stock market would jump-start projects without further pressure on the fiscal balance, it is not a sustainable strategy" Moody's said.
The agency added that a rise in initial public offerings of PSU companies could crowd out private firms which will have "a highly damaging effect in the current business climate of tight borrowing conditions".
"The government should therefore exploit this strategy only in moderation," it added.
Meanwhile, the government in the pre-budget Economic Survey tabled in Parliament today proposed to sell a minimum 10 per cent stake in all unlisted public sector enterprises and "auction" those that cannot be revived, thus suggesting a disinvestment target of Rs 25,000 crore per annum.
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