'Meeting Rs 40,000 cr disinvestment target a stiff task' | business | Hindustan Times
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'Meeting Rs 40,000 cr disinvestment target a stiff task'

business Updated: Dec 09, 2011 20:41 IST
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The government on Friday said that mopping up Rs 40,000 crore through disinvestment is a "stiff task" amid volatility in the capital markets even as it is looking at other options, like buyback of shares by PSUs, to meet the target.

"With the present trend and prevailing scenario in the capital market, achieving the disinvestment target of Rs 40,000 crore during the remaining period of 2011-12 would be a stiff task," said the Mid-Year Analysis, 2011-12, tabled in Parliament.

The government is envisaging mobilising Rs 40,000 crore by selling its stake in public sector undertakings (PSUs) through public offers, but has so far managed to collect only Rs 1,145 crore from Power Finance Corporation's follow-on public offer (FPO).

Given the volatility in the capital market, in the backdrop of the global and domestic economic situation, the government has not come out with any public offer to sell its stake in PSUs, except PFC, this fiscal.

So far this fiscal, receipts from disinvestment and miscellaneous heads are Rs 2,731 crore, as against Rs 2,235 crore in the comparable period in 2010.

Meanwhile, finance secretary RS Gujral said, "we still feel that there is a possibility of it (achieving the target)," and the government is looking at other options, including buyback of shares by PSUs, besides public offerings.

Asked if share buyback by PSUs is also among the options, Gujral said: "There are options, including buyback. That is one of the options".

The secretary, however, said the decision on the process of disinvestment would be taken by finance minister Pranab Mukherjee in consultation with department of disinvestment (DoD).

"It is between disinvestment secretary and the finance minister. If any of those options require Cabinet approval, the ministry will take it. We are working on it," he said.

According to sources, the DoD has circulated a cabinet note to seek views of different ministries to sell government equity through buy-back mode in PSUs.

About a dozen cash-rich units, like Coal India, SAIL, NMDC, ONGC and NTPC, have been identified for the purpose, they added.

The cabinet committee on Economic Affairs has also approved disinvestments in SAIL, ONGC, HCL, BHEL and NBCC.