Indian gov't presents bold move on disinvestment

The Indian government Friday laid down a new, bold policy for disinvestment ensuring that 10 percent of the equity of listed profit-making Central Public Sector Enterprises (CPSEs) go to the general public.

In another policy shift, the proceeds of the disinvestment can now directly fund the capital expenditure of the social sector programs such as education and health care and need not be routed through the National Investment Fund (NIF).

"All unlisted CPSEs having positive net worth, no accumulated losses and having a net profit in the three preceding consecutive years should get listed at stock exchanges," Home Minister P. Chidambaram said here.

The new policy relating to the disinvestment proceeds being used for capital expenditure for social schemes would come into effect from now onwards, he said.

"The unlisted CPSEs will off-load their shares at an 'appropriate' time looking at the market. Before being sold off to the public, the Cabinet will clear them on a case by case basis," Chidambaram said.

The decision of off-loading 10 percent of listed companies will have a bearing on many companies including mineral majors National Mining Development Corporation (NMDC) and Mineral and Metals Trading Corporation (MMTC) as the public shareholding in these two companies is 1.62 percent and 0.67 percent respectively.

In its second term, the Congress-led Government has already paved the way for listing of two Public Sector Undertakings (PSUs)- National Hydro Power Corporation (NHPC) and Oil India, and Friday's decision would result in more CPSEs hitting the capital market.

At present, over 40 listed state-run companies and over 100 others, including Bharat Sanchar Nigam Limited (BSNL), qualify for listing.

"Because of fiscal constraints, a special dispensation is made for three years to directly channelize the money into the capital expenditure for social sector", Chidambaram said.

The unlisted companies which will be required to go public will include blue chip firms like Bharat Sanchar Nigam Limited, Rashtriya Ispat Nigam Limited and Coal India.

Source: Xinhua