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Govt flayed over land valuation in PSU sale

A parliamentary committee has severely criticised the government on the issue of land valuation in divestment of stake in public sector units, saying asset valuation guidelines were "inadequate and vague".

Rejecting the government's contention that value of assets which were not giving income to the PSU to be divested as questionable, the Standing Committee on Finance said in its 30th report that land should be valued separately and should be factored into total asset value.

The recommendations, placed before the Lok Sabha earlier this week, came in the wake of privatisation of Balco, where the committee questioned the government on the rationale for sale of profit-making companies at a throwaway prices.

In its reply, the divestment ministry said, "A company might have huge assets, but those assets are not giving income to the company."

To buttress the argument, divestment secretary Pradeep Baijal told the committee that though National Textile Corporation had land worth Rs 24 billion, the property was an encumbered asset because no state government would give permission to sell that land.

Dismissing the arguments, the committee, headed by N Janardhana Reddy, asked the government to "modify the guidelines for evaluation of the assets of the PSUs under consideration for divestment which would take value of land invariably into consideration."

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