Divestment is back

  • HT Correspondent, Hindustan Times, New Delhi
  • |
  • Updated: Feb 27, 2010 02:43 IST

The government expects to raise Rs 40,000 crore by selling shares in public sector units (PSUs) in 2010-11, signalling a big-bang return of the politically sensitive disinvestment programme.

It will also simplify foreign direct investment (FDI) norms to attract more foreign companies to invest in India.

Presenting the Budget for 2010-11 in the Lok Sabha on Friday, Finance Minister Pranab Mukherjee said: “Through this (disinvestments) process, I propose to raise a higher amount during the year 2010-11.”

Mukherjee hopes to raise about Rs 15,000 crore more than what the government expects  this year. The proceeds will be utilised to create assets under various social sector schemes.

Since the UPA government came to office for the second term this May, two public sector companies — NHPC and Oil India — have listed on the bourses, while two others, NTPC and Rural Electrification Corporation (REC), have concluded follow-on public offers.

In November, the government had decided that the public should hold at least 10 per cent shares in all listed profitable government-owned companies.

There are 10 listed public sector units where public shareholding is less than 10 per cent. They include companies such as NMDC and Neyveli Lignite.

The government has also decided that all unlisted PSUs that have made profit in the past three years and have a positive net worth (assets greater than liabilities) should be listed on stock exchanges. About 50 companies qualify for disinvestment under these criteria.

Mukherjee also said the government would simplify the FDI regime to make it easily comprehensible to foreign investors.

“The government intends to make the FDI policy user-friendly by consolidating all prior regulations and guidelines into one comprehensive document. This would enhance clarity and predictability of our FDI policy to foreign investors,” he said.

The government has already launched a draft note consolidating the plethora of rules and norms governing foreign investment in the country under one comprehensive policy document. The move is aimed at making available all information on FDI policy at one place.

The country received FDI inflows of $20.9 (about Rs 1 lakh crore) during April to December 2009, a touch lower than $21 billion received during the comparable period last year.

“Increase in FDI flows shows India’s attractiveness as an investment destination. Now it is time for us to simplify the procedures,” said Amit Mitra, secretary general of industry body (Ficci).


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