Search the Internet          Tips  Sites: Finance, Investment

No review of privatisation policy: Divestment ministry

The divestment ministry said on Friday it was not changing its policy to sell controlling stakes in state-run firms to strategic partners but might look at public offers in future, a senior official said.

"There is no change in policy. We will continue with strategic sales but would also experiment with selling stakes to the public in future divestments," Pradeep Baijal, the senior most bureaucrat in the divestment ministry said.

Baijal was reacting to a report in a business daily which said on Friday that the government was expected to review its policy of selling controlling stakes in state-run firms as strategic sales had been mired in controversy.

The newspaper said the row over a majority stake sale in a state-owned aluminium company, few bidders for some firms and the possibility of some controversy-hit groups being given stakes were forcing the central government to rethink its policy.

The Business Line newspaper quoted two unnamed cabinet ministers as saying the government was now looking at reverting to an earlier proposal of selling stakes in state-owned companies to the public or institution investors.

Baijal said the government had explored selling stakes in state-run firms in the past to the public but it had not worked as the depth of the domestic capital market was far less than in other developed countries.

"We had even considered the initial public offer route for the divestment in Videsh Sanchar Nigam Ltd but decided to go in for a strategic sale," Baijal said.

He said the Divestment Commission had suggested exploring the IPO route for privatisation in only five cases out of its recommendations for 58 state-run firms.

In February, the government announced its decision to sell 25 per cent in VSNL to a strategic partner as part of its strategy to jumpstart its faltering privatisation programme.

Nearly 7,000 workers at aluminium-maker Balco have been striking for over two months after the government sold its 51 stake to a private metals maker Sterlite Industries.

Only two controversy-hit groups have bid for the 26 per cent controlling stake in Indian Airlines, stirring speculation that the sale may now be scrapped.

The bidders for Indian Airlines are appliance maker Videocon International, named by the stock market regulator in a share-price rigging scandal, and the expatriate Hinduja brothers on trial in India on charges involving the Bofors arms scandal.

Sterlite Industries Ltd which bought Balco and BPL which has bid for telecoms giant VSNL were also named last month by the stock market regulator in the share-rigging scandal.

Tell us what you think of this report