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Divestment proves to be a saving grace

BS Economy Bureau

The current fiscal has proved to be the most successful year for the Centre in terms of receipts from divestment in state-owned enterprises.

In the Economic Survey, the government has taken credit for proceeds of Rs 55.73 billion from the divestment, including Rs 23.50 billion by way of special dividends and withdrawal of reserves from Videsh Sanchar Nigam Ltd, Minerals & Metals Trading Corporation of India and State Trading Corporation.

According to the Survey, Rs 22.50 billion has come by way of dividend, special dividend and dividend tax. A sum of Rs 2.43 billion realised from the sale of three Hotel Corporation of India properties would be transferred to Air-India to bolster its balance sheet.

The finance ministry is, however, of the view that the amount realised through special dividends should be treated as non-tax revenues and not as divestment receipts.

The amount realised in the current fiscal, however, excludes the proceeds from 10 public sector undertakings, which according to the Survey are to be divested by March-end. These include Maruti Udyog Ltd, Indian Petrochemicals Corporation Limited, Hindustan Zinc and the remaining hotels of ITDC.

The government had set a target of Rs 120 billion from divestment proceeds in the current fiscal. Of this, Rs 70 billion was to be used for restructuring state undertakings and providing a safety net to workers.

The remaining Rs 50 billion was to be used to provide additional budgetary support for the Plan primarily in the social and infrastructure sectors.

The government is at present examining the recommendations of the Divestment Commission on companies like Neyveli Lignite Corporation, Manganese Ore (India) Ltd, Rites and Project and Equipment Corporation. It now proposes to refer the non-strategic PSUs and their subsidiaries, which excludes Indian Oil Corporation, ONGC, Gas Authority of India Ltd, to the commission for professional advice.

Among the 18 PSUs slated for divestment, Air-India, Indian Airlines, Hindustan Copper and Nalco are the big-ticket companies where the government intends to reduce its holding.

Six PSUs - Bharat Leather, Praga Tools, Scooters India, Bharat Pumps & Compressors, Bharat Brakes and Valves and Reyrolle Burn Ltd were returned to the department of heavy industry, the administrative ministry as there were no bidders.

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