The government on Thursday announced a bold divestment plan that seeks to list all profitable public sector enterprises, a move that would see public offers by over 100 companies, including telecom behemoth Bharat Sanchar Nigam Limited.
The funds from such sale would be directly deployed for social sector schemes, instead of being routed through the National Investment Fund.
The divestment plan also requires already listed central public sector enterprises to ensure at least 10 per cent public holding, home minister P Chidambaram told reporters after a meeting of the Cabinet Committee on Economic Affairs, which was chaired by Prime Minister Manmohan Singh.
According to the CCEA's decision, unlisted firms with three-year track record of net profit and positive networth will have to come out with Initial Public Offerings.
In its second term, the Congress-led government has already paved the way for listing of two PSUs -- NHPC and Oil India, and Thursday's decision would result in more CPSEs hitting the capital market.
At present, there are over 40 listed state-run companies and over 100 others, including BSNL, qualify for listing. CPSEs going to market would involve 'some disinvestment' of the government, Chidambaram said, adding that this would be done at an 'appropriate' time.
In another policy shift, the proceeds of the disinvestment can now directly fund the capital expenditure of the social sector programmes such as education and health care and need not be routed through the NIF.
"Because of fiscal constraints, a special dispensation is made for three years to directly channelise 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 Limited.
As regards the listed companies, Sebi regulations require all listed companies should have a minimum public float of 10 per cent. Several listed public sector companies, however, have less than 10 per cent public holding.The government's decision, said SCOPE executive director U B Choubey, "will bring out the hidden networth of the state-owned companies. . .They (CPSEs) are ready and will come out with their public issues."
The corpus collected from the disinvestment, he added, should be used for expansion and modernisation of CPSEs and social sector programmes of the government.
The government had recently unveiled plans to reduce its shareholding in NTPC, Sutluj Jal Vidyut Nigam and Rural Electrification Corporation.
During the current fiscal, the government raised Rs 2,013 crore (Rs 20.13 billion) by offloading its shares in the hydro-power major NHPC and Rs 2,247 crore (Rs 22.47 billion) from stake sale in OIL.
As per the disinvestment policy of the United Progressive Alliance, the government is committed to offloading equity in public sector undertakings while retaining 51 per cent stake.
"The public sector undertakings are the wealth of the nation, and part of this wealth should rest in the hands of people. While retaining at least 51 per cent government equity in our enterprises, I propose to encourage people's participation in our disinvestment programme", Mukherjee had said in his Budget speech in July.
