Disinvestment hopes get a boost after PM hint

Economists hoping that the government would move ahead with disinvestment in public sector enterprises have reason to cheer, as Prime Minister Manmohan Singh has indicated that the full general budget for 2009-10 to be presented in July may contain such proposals.

''Fiscal prudence and disinvestment of public sector units - all these issues will be tackled by the finance minister in the budget,'' Singh told reporters after the swearing-in ceremony of the second batch of ministers at Rashtrapati Bhavan. ''We would ensure economic growth momentum but at the same time fiscal prudence will be kept in mind.''

First on the block are likely to be Oil India Ltd and NHPC, as a stake sale in these two PSUs had received cabinet approval during the UPA's previous tenure. The permission given in 2007 was for selling 10 per cent government stake in OIL and 5 per cent in NHPC in the primary market. However, the government was unable to carry out the plan due to weak market conditions.

Others on the priority list for disinvestment in the medium term include Bharat Sanchar Nigam Ltd (BSNL), Railway consultancy firm RITES, National Aviation Company, and Ircon.

Although the Finance Minister is reluctant to commit himself on any disinvestment related issues on record, sources say there is a strong need of a disinvestment policy for at least the next five years.

The few disinvestments before the government are-a seemingly strong preference for profit making PSUs to get political accolades, but at the same time loss making units will not be shut down. Besides, NHPC and OIL India IPOs will be the test cases with NHPC IPO expected to hit the market around September.

Meanwhile, the government will have to play a balancing act at any given time as it tries to go ahead with disinvestment and filling the national investment fund. But, if this kitty starts swelling and the government decides to use the moolah for plugging the revenue deficit, it will have to amend the rules.

In its first term, the UPA government's disinvestment roster comprised about 25 companies. But the plans got scuttled after opposition from the Left, which then had a strong say in government policy. However, after the recent election, the Left parties are no longer an important force.

''The new list will have names that are conducive to all members of the present coalition,'' the Indian Express reported an unnamed government official as saying. For instance, Neyveli Lignite located in Tamil Nadu, may be knocked out of the list given the M Karunanidhi-led Dravida Munnetra Kazhagam's (DMK's) opposition. And similarly, Hindustan Photo Films, which too was part of the earlier list prepared by the UPA in its first tenure, may not be taken up following Trinamool Congress's reservations.