D word

Updated: Jan 11 2005, 05:30am hrs
As budgetary preparations get underway, there are reports that the UPA government seeks to mop up revenues through disinvesting a part of its stake in Bhel and Maruti Udyog Ltd. Unlike earlier years, the Union budget for 2004-05 set a more modest target of only Rs 4,000 crore in this regard. The only PSU that found mention was NTPC which proposed to raise capital through a public issue. The government intended to ride piggy-back on this issue and offload 5% of its holding. Although this intention was realised, it was not without a hue and cry raised by the Left which is extremely suspicious of the D word.

No doubt, the timing of the governments decision is influenced by the bull run in the market. It still has a 18.24% stake in Maruti and with auto stocks going through the roof, the government thinks that this is the best time to sell its residual holding. Interestingly, the ministry of heavy industries had to acquiesce in this decision as there were indications earlier that the latter had decided to hold on to the governments stake in Maruti. Not so long ago, the ministry had even taken it up with the dominant holder Suzuki Motor Corporation that the government was not privy to its investment decisions to set up an additional assembly facility. Clearly, there is more than one voice within the UPA government on the D word.

In the circumstances, will the Left allow the government to go ahead with its plans Although the government states that the proceeds from disinvestment will be used for its social sector schemes, the Left remains suspicious. Especially as the governments fiscal situation is grim, there is naturally bound to be a temptation to divert the proceeds to meet the day-to-day costs of running a bloated administration and lower the fiscal deficit.

In this milieu, even the modest target that the UPA government has set is not easy to attain. To do so by all means, including stealth, is a big temptation in this regard. Not surprisingly, reports have already surfaced regarding the innovative way that it is piggy-back riding Punjab National Banks public issue to raise Rs 1,200 crore. All eyes naturally will be on how it pushes through the disinvestment of part of its holding in Bhel and Maruti in the teeth of Left opposition.