rediff.com: Indian PSUs demand clearer divestment policy

Indian public sector units, or PSUs, expressed concern over the government's divestment programme, saying it was flawed and did not have clear goals.

"The Standing Conference of Public Enterprises, or SCOPE, is not against divestment, but this should be planned and done in conjunction with restructuring," SCOPE chairman Uddesh Kohli told reporters in New Delhi.

The government aims to raise Rs 100 billion ($ 2.3 billion) in the current fiscal year through sales of stakes in state-run firms.

The government has had poor success in the past with its divestment plans, raising only Rs 183.94 billion in nearly a decade against a target of Rs 443 billion. In the latest financial year ended March 31, 2000, the government raised only Rs 15.85 billion against a target of Rs 100 billion.

A combination of factors has stymied the government's plans in the past -- its unwillingness to shed majority control, political and labour opposition and unfavourable market conditions.

Kohli, who is also the chairman of the Power Finance Corporation, said divestment was welcome if it could provide more freedom and autonomy of operations to state-run enterprises.

"Divestment so far has been largely indiscriminate. We should have a blue print or a road map," he said.

The SCOPE board, at a recent meeting, had warned against monopoly conditions, both state-run and private, he said.

Kohli said a monopoly situation could arise if the government sold its entire stake or a major portion to a single party. The divestment should be to a number of buyers, he said.

SCOPE said in a statement that the government must clearly spell out its policy on what sectors it wanted to be in and which it wanted to exit from and cautioned against hasty divestment.

Kohli said most of the divestment undertaken in the last two-three years was in firms, which were not dependent on budgetary support or asking for government help.

"Government is thus closing its own sources of income by selling off shares of highly profitable firms which have been paying rich dividends year after year," SCOPE said.

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India's state-run firms demand clearer divestment policy