As part of a strategy to increase the focus on the public sector, the Cabinet, scheduled to meet on Wednesday, is expected to discuss the constitution of an Empowered Group of Ministers to look at the sale of government equity in public sector units.
It is also likely to endorse the composition of the Board of Reconstruction of Public Sector Enterprises and will also decide on the purchase preference policy for PSUs, which is likely to be extended by two years.
"The EGoM will consider the issue of divestment of government stake in various public sector units. It will take decisions on whether stake should be offloaded in the domestic market or international market and on the pricing of shares," said a senior government official.
The Divestment Development: Complete Coverage
Senior officials in the heavy industry ministry said the constitution of the BRPSE was in progress. The board would have seven members comprising senior government officials across various ministries including heavy industry, expenditure, petroleum and natural gas among others.
It will also include two sitting experts. The third, a domain expert, will be a part of the board, depending on the nature of the case.
Top officials said the board will go beyond the prerogative of diluting the government's stake in the PSUs, but shall find ways of empowering the companies.
The terms of reference for the board will be decided in consultation with the National Advisory Council, headed by chairperson Sonia Gandhi.
The NAC had emphasised the board shall not limit itself to only restructuring of sick public sector enterprises, or advise revival packages for sick units but shall devise ways and means of strengthening the public sector as a whole.
Officials said the purchase preference policy was likely to be renewed by the Cabinet. The policy gives PSUs a 10 per cent price preference when bidding for contracts being awarded by the government or other state-run enterprises.
Minister of Heavy Industry Santosh Mohan Deb had announced the purchase preference policy, giving PSUs the first right to supply equipment and projects to other PSUs, would be extended by two years till March 2006.
The policy, which was in force till March 31, 2002, was extended by two years. The latest extension expired on March 31, 2004. Under the policy so far, a 10 per cent purchase preference would be extended to tenders of Rs 5 crore (Rs 50 million) and above.
The finance ministry had, however, wanted the price preference to be either scrapped completely or reduce the purchase preference to 5 per cent. It had also indicated that Navratna PSUs might not be justified in using the purchase preference policy.
