COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Govt told not to use PSU disinvestment to meet budgetary deficit

The disinvestment process in the public sector undertakings should be delinked from the budgetary process in case the stock is sold through the capital markets.

Making the recommendation, the department of public enterprises said the money raised through the disinvestment process should not be utilised to cover the fiscal deficit.

In the last Budget, then finance minister P Chidambaram had set a target of Rs 50 billion for the disinvestment process. However, the target could not be achieved as several foreign offerings did not materialise.

Referring to the process itself, the department felt it may not be easy to implement it in a time-bound manner as a lot depended on the vagaries of the capital and international markets. Moreover, it may not be in the public interest to offload at a time when the market is down as this may affect the yield.

As for the strategic sale, the department is not worried about the inclusion of such a sale in the Budget as it would not be affected by the market forces. The price of the stock in such cases is fixed on the basis of negotiations, irrespective of the market prices, sources said.