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Govt draws flak for rushing through UTI ordinance

Taking the government to task for rushing through the Unit Trust of India Ordinance without waiting for the report of the Joint Parliamentary Committee on stock scam, senior Congress member Manmohan Singh made a strong demand for restructuring of UTI and demanded protection to millions of investors in the flagship US-64.

Moving a statutory resolution in the Rajya Sabha disapproving the UTI (Transfer of Undertaking and Repeal) Ordinance, 2002, he said the government should have waited for the JPC report before bifurcating UTI.

Singh said by choosing the Ordinance route, the government had scuttled the process of eliciting the views of the members of Parliament and obtaining an opinion from the Standing Committee of Parliament.

The former inance Minister said macro-management of the economy has to share the blame for what happened to the UTI or the capital market and citing the fall in Sensex, he said it was because of the government's inability to manage expectations of the investing community.

While stressing the need for a holistic, more consistent and longer term view of the entire matter to remove the uncertainty and instability of the capital market, he favoured a medium term policy in this regard.

Referring to the proposed divestment of Nalco, Singh wanted to know if there was any assurance that people who would take over the company would not exploit natural resources beyond a certain limit and in a manner which was harmful to the ecology. This was the idea behind nationalisation of coal mines, he explained.

He said millions of people, mostly the retired persons, widows and charitable trusts, which had invested in the US-64, were bewildered as they had suffered huge losses. "What is happening in UTI has shaken the confidence of the investors," he said pointing out at the sharp decline in the dividend rate of UTI after 1996-97 and the fall in its Net Asset Value.

Singh asked the finance minister to assure the House that the Bill seeking to replace the Ordinance, moved by him, did not foreclose the options of restructuring UTI.

The Congress member wanted to know the mode of running UTI-I, because even after bifurcation of UTI, a large portfolio remained with the Unit-I scheme and people wanted an assurance that the portfolio would be properly managed.

He said the Unit-II scheme should be Sebi compatible and added a fiscal and monetary system, which instilled confidence in the minds of investors was needed to give a new dynamism to the country's economy.

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