A parliamentary committee has suggested that the government set up a new disinvestment commission to review the disinvestment policy. In its report, the Veerappa Moilyled standing committee on finance said the continuation of disinvestment programme without reviewing the disinvestment policy, including its modalities, would doubtlessly end up in failure.
“As against a total target of Rs 1.5 lakh crore for disinvestment receipts, only Rs 75,813.71 crore could be realised during the last four fiscals,” the committee noted in its report submitted to Parliament.
It added that the government should constitute a new disinvestment commission to restructure the modalities of disinvestment in the light of the current economic scenario. Disinvestment commission was constituted in 2001 to review and restructure the modalities of disinvestment and has not yet been reconstituted.
The Moily Committee has also recommended that disinvestment department should have its own manpower, which can deal with disinvestment transactions. “The committee find it intriguing that the fee sometimes quoted by the intermediaries is as undeliverable and as irrationally low as Rupee one and sometimes quite high,” it observed in its report, adding that these are firm pointers towards the possible corrupting elements.
The committee recommended that a professional agency, in line with Skill Development Agency, may be set up in order to enable the department to discharge its mandate effectively rather than depending on outsourced agencies to deal with the very sensitive and confidential disinvestment process.
In the current fiscal, the government has budgeted a record target of Rs 58,425 crore from stake sales in state-run firms. Of this, Rs 43,425 crore is expected to come from stake sales in government-controlled companies and Rs 15,000 crore from firms where the government has a minority stake.
Since the beginning of this fiscal, the government has been able to raise only Rs 1,715 crore by selling 5% stake in Steel Authority of India (SAIL). The issue, however, was largely subscribed by public sector institutions, with LIC taking up about 72% of the offer size.
The government has proposed to shed 10% stake in Coal India and 5% in ONGC. At current market prices, the proposed disinvestment may fetch about Rs 38,500 crore. BANK CAPITAILSATION In a separate report, the committee has urged the finance ministry to expedite the process of setting up a holding company to meet the capital requirement of public sector banks. The committee observed that there is no specific roadmap or strategy to help meet the capital requirements of PSBs.
“Capital infusion from the budget cannot be an endless ritual as it encourages incompetence and inefficiency in the PSBs,” the committee said in its report, adding that PSBs should also generate funds internally for their re-capitalisation. Public sector banks require equity capital of Rs 2.4 lakh crore by 2018 to meet Basel III capital adequacy norms.
For the current fiscal, the government has allocated Rs 11,200 crore for bank capitalisation.