Under attack from Left parties over disinvestment of profitable public sector units, government on Tuesday justified the decision saying the proceeds got from divestment would be used for social sector commitments till March 2012 in view of 'extremely difficult' situation.
"We can't afford a fiscal deficit which we left last year at 6.8 per cent. Financial prudence says we should come back quickly to Fiscal Responsibility and Budget Management," finance minister Pranab Mukherjee told the Lok Sabha while replying to a calling attention on government's decision to divest shares in PSUs.
The Left parties which had raised the issue were not satisfied with his reply and walked out and they were joined by Samajwadi Party.
"Whatever disinvestment we have done is in absolute conformity with the National Common Minimum Programme which you were supporting when you were our allies," Mukherjee said. Pointing out that over Rs 1,800 crore (Rs 18 billion) had been collected in the National Investment Fund which had earned additional interest of Rs 334 crore (Rs 3.34 billion) in two years, he said the entire fund was 'intact' and would be utilised for capital investments in targeted social sectors like healthcare, education and employment generation.
He said the situation was 'extremely difficult' and because of this, government would be utilising these proceeds to meet social sector needs for three years till March 2012. The NIF proceeds would be managed by fund managers like UTI, SBI and insurance firms.
Justifying the decision to disinvest profitable PSUs and getting them listed, Mukherjee said the enterprise value of those units divested earlier had increased manifold.
Giving examples, he said the value of NHPC rose by 125 per cent from Rs 18,280 crore (Rs 182.8 billion) to Rs 37,720 crore (Rs 377.2 billion) after the Initial Public Offer and that of OIL, from Rs 9,844 crore (Rs 98.44 billion) to Rs 27,219 crore (Rs 272.19 billion).
"If they were not listed, you would not have got these figures," he said, adding that such was the credibility of PSUs that their shares were oversubscribed.
Taking a dig at Left parties, he said, "If we had stuck to your position, our position would have been what you are today. Thank God, we took the decision (of reforms)." ". . . 25 years ago, I could not give the farmers a debt relief of even Rs 500 crore (Rs 5 billion), but today our position is such that I can give a waiver of Rs 71,000 crore (Rs 710 billion)," he said amid thumping of desks by Congress members.
The minister emphasised that funds generated by disinvestment for social sector were 'unlocked assets' which were supplementary to budgetary allocations in these areas. Earlier, Communist Party of India-Marxist leader Basudeb Acharia accused the government of introducing 'creeping privatisation' and handing over the PSU shares to corporate houses or a select few.
Rubbishing government's argument that funds from disinvestment would be used for the social sector, he said Rs 5 lakh crore (Rs 5 trillion) was available with PSUs as surplus funds which could be used for the purpose.
If the government could give thousands of crores as tax concessions to corporate houses, it did not have any financial problem, Acharia said.
