NEW DELHI, NOV 24: In an obvious attempt to take the wind out of the sails from the Congress party's planned attack on its privatisation policies, the government has circulated a 52-page note that contains laudatory references to the privatisation process in, hold your breath, Italy, the birth-place of Sonia Gandhi. A full page of the quasi-White Paper `Presentation on Disinvestment' details that the process of privatisation began in Italy in 1984, and within just five years of this, the government sold 3,267 enterprises. Government holdings were sold to public sector banks, retail and private investors and in the third phase, these banks were also privatised. The paper says that while privatisation was vigorously opposed in Italy, the government earned as much as $25 billion by offloading at 61 per cent stake in ENI, a major government company - what's more, in each phase of disinvestment, the share price of the company rose. Interestingly, the paper circulated today to ruling party MPs does not even once mention the name of former Prime Minister Narasimha Rao, under whose government the process gained momentum. Other than this, the paper moves along predicted lines, though the fact that the paper has been circulated reaffirms the government's commitment to go ahead with its privatisation plans. Explaining the context for why the government just has to exit these Public Sector, the report cites various figures quantifying the loss the government has made on PSUs. In the last decade, for instance, it has infused Rs 5,243 crore into these PSUs in the form of fresh equity, it has given them budgetary support of Rs 61,211 crore, outstanding loans of Rs 18,411 crore have been written off, and another Rs 10,350 crore of loans have been converted to equity. And what has it got for all this? A mere Rs 17,938 crore by way of dividends - a large part of this has come from the oil PSUs, and the large dividend is really a reflection of monopoly profits more than anything else. The paper records that the government realised Rs 18,393 crores during the past ten years through the sale of shares of PSUs against the target of Rs 44300 crores.The document comprising of five parts gives a detailed account of how the divestment policy came into being during the Chandra Shekhar government in 1991 and later adopted by the Congress government later. It says that privatisation and divestment has been accepted all over the world as an economic necessity. Apart from Italy, other countries cited as examples are Germany, France, U K, China and Japan among others.The paper also deals with the evolution of the divestment policy in India andhow it began with off-loading 20 per cent equity in the PSUs (1991), to divesting part-government holdings in selected PSUs to mutual funds (1992), to withdrawal from non-core sector (United Front government in 1996), to bringing down government holdings to 26 per cent and retain only strategic sector (Vajpayee government).The paper asserts that the entire receipt of the divestment and privatisation will be used for meeting expenditure in social sectors, restructuring of the PSUs and retiring public debt.The paper said that the only PSU that has been sold so far is Modern Foods (India) Limited and says the sale has benefited the workers and bakery sales have gone up by 40 per cent.It also gave a graphic account of how sale of 50 per cent equity and management control by the government of Orissa to AES in the Ib-Valley Thermal Power generating company had resulted in huge benefit to the government and the consumers.It lists 29 companies up for the sale during the current fiscal and said that global advisers have been appointed for almost all of them.Another interesting feature of the report is that the profit after tax on sales in PSUs in non-service sector was 5.28 per cent while in the manufacturing sector, they were suffering a loss of 3.90 per cent.
