Chidambaram may revive divestment

The government’s plan to raise Rs 30,000 crore this fiscal year from disinvestments in public sector companies is looking up again after P Chidambaram returned as finance minister. Mahua Venkatesh reports. New measures to revive an old plan

The government’s plan to raise Rs 30,000 crore this fiscal year from disinvestments in public sector companies is looking up again after P Chidambaram returned as finance minister last week.

Five months into the new financial year, the sell-off programme, hit by a slowing economy and adverse market conditions, has not moved. But officials are now galvanised.

"After failing to meet disinvestment target in the last financial year, it is very important to initiate the process this time. The new finance minister has indicated that this must be given priority and we will soon get going on this," a finance ministry official, who did not wish to be identified, told HT.

Government sources said that there could a few new faces in his ministry to ensure that targets are met.

Disinvestment could be critical for the government trying to take every possible step to boost growth and contain a high fiscal deficit. Chidambaram has indicated to his aides that he will tighten the purse strings and will keep a close eye on spending.

In 2011-12, the target was Rs 40,000 crore, the government raised only a third of the amount.

“Disinvestment is critical for the economy and the government should start the process right away and not wait for the end of the year. We need to contain fiscal deficit and revive the economy,” said Chandrajit Banerjee, director-general, Confederation of Indian Industry.

Funds from disinvestment could increase the government’s elbow room in spending, but that clearly would not be enough to contain the fiscal deficit.

North Block insiders also said that Chidambaram has taken a tough stand against any further increase in spending. “Given the current fiscal situation the government has to prioritise spending and that is the message that he has given to his departments,” another official said.