Budget 2014: Big Bang Disinvestments Ahead?

Will the Government be able to raise Rs 30,000-70,000 crore from stake sale of public sector undertakings (PSUs)? And will Finance Minister Arun Jaitley announce fresh measures to boost disinvestment?

While Subir Gokarn, director (research), Brookings Institution, feels the process has to be looked at as re-balancing of assets by the Government, the challenge would be to put the proceeds to good use.

Politician and academician Jay Narayan Vyas said: "Earlier estimates were always high. Budget makers must approach this with a handful of salt because the record of disinvestment is not very promising."

Gokarn and Vyas were participating in a special Budget 2014 show on BoomNews's #IndiaHangout in association with Business Standard.

Prithvi Haldea, chairman, Prime Database, felt IPOs of profit-making PSUs would be good for the market. "And strategic sale of non-strategic companies would be a good move. Appetite for good shares is never an issue in the primary market."

Vyas said that Gujarat Government has never tolerated bad performances beyond a point, and 'has successfully offloaded/sold/closed units like Gujarat Machine Tools."

"Central disinvestment has been hit due to lack of transparency. If there is transparency, other issues are subordinate. Employees are also concerned about their well-being and employability," Vyas added.

Gokarn said the objective of the process should be value maximisation, and the Government has to identify PSUs accordingly. "The political equation cannot be stripped out of disinvestment. There has to be a debate on how assets are valued. Disinvestment is a legitimate way of raising money: some of them (PSUs) will find great value as going concerns, some will find value as real estate assets. Should Govt be sitting on assets of companies like NTC?"

Haldea said that the proceeds of sell-offs must be first used for employee welfare. "Sebi has set the ball rolling by saying that PSUs should have 24% public holding. Government can take the market by surprise by holding an auction. And PSUs offer a good opportunity to retail investors."