In a move that may spell further setback to the divestment process, Prime Minister Manmohan Singh on Thursday put on hold all divestment decisions and proposals, including sale of shares in Nalco and NLC, after crucial ally DMK threatened to withdraw support to the UPA government on Neyveli [Get Quote] shares.

"There have been representations from some of the constituents and allies of the UPA about the process of divestment in some public sector enterprises. Taking into account their concerns, the Prime Minister has decided to keep all disinvestment decisions and proposals on hold pending further review," PM's media adviser Sanjaya Baru said in a statement, shortly after DMK chief and Tamil Nadu Chief Minister M Karunanidhi said in Chennai that his party was reconsidering its continuance in the Centre.

This is the second major divestment decision that has been put on hold by the government. Last year under severe criticism and threats by the Left parties, the government kept on hold its decision to divest 10 per cent of shares in public sector BHEL.

The Left parties, which provide critical support of over 60 MPs to the government, had strongly opposed the two divestment decisions. The Left parties have welcomed the Prime Minister's decision. They said there was no threat to the government.

In the wake of Tamil Nadu Chief Minister M Karunanidhi's threat to pull out of the UPA government on the divestment of Neyveli Lignite Corporation, Union Ministers and senior DMK leaders Dayanidhi Maran and A Raja met Prime Minister Manmohan Singh in New Delhi and conveyed to him the "views" of their party chief.

After the meeting, Maran said the DMK wanted the matter to be sorted out collectively within the UPA.

Asked if DMK would reconsider its decision to pull out from the UPA government on the issue, he said, "The DMK is part of the UPA. We have to work collectively and sort out the matter within the UPA."

Earlier, Karunanidhi said in Chennai, "When the Centre is unable to accept the NLC workers' demand, we are considering whether we should continue in the UPA government and accept responsibility for the decision. "I have asked the DMK ministers to inform this to the Prime Minister," he said.

The Divestment Development