Expressing displeasure over the government’s dependence on ‘offer for sale’ or auction route to meet its disinvestment target, a Parliamentary Standing committee has asked the government to promote retail participation, instead of selling shares of PSUs to institutions through the OFS route.
?The committee is not in favour of ‘offer for sale’ of shares route by promoters through Stock Exchange Mechanism, instead the government should look for market penetration and encourage retail investors,” the Standing Committee on Finance, headed by BJP leader Yashwant Sinha, said in its report tabled in Parliament.
It reiterated its earlier recommendation that the government should form a coherent disinvestment policy with clear direction and vision.
The report pointed out the absence of a concrete disinvestment policy and lamented that the disinvestment proceeds of the Central Public Sector Enterprises (CPSEs) over the years have been treated as ?selling family’s silver to pay grocery bills?.
All disinvestment proceeds being used for revenue expenditure are not socially justified, it said. ?As a result, the corpus of National Investment Fund (NIF) is left with a meagre amount of R1,814.45 crore for investment purpose. Therefore, sustainable returns from the disinvestment proceeds could not be earned,? it said.
Considering the low balance of funds in NIF and its impact on returns, it said, the panel is not convinced with the proposal of utilising the budgeted disinvestment proceeds of R40,000 crore in 2013-14 for recapitalisation of PSBs and towards budgetary support to the Indian Railways.
?As recommended elsewhere in this report, the government could easily find resources for capitalisation of PSBs through early setting up of financial holding company or internal resources of PSBs. Similar steps may also be taken for Railways,” it added. The Cabinet has given its approval to utilise the disinvestment proceeds for recapitalisation of banks and other purposes.