DISINVESTMENT PROCESS MAY GAIN SPEED

New Delhi: After the initial euphoria over reforms getting a leg-up following the United Progressive Alliance (UPA) Government surviving a trust vote and freeing itself from the Left’s clutches, reality seems to be dawning upon policymakers.

The win at Tuesday’s confidence vote will technically allow the Congress-led alliance to be in power till April next. But as a senior official noted, the ‘window of opportunity’ to push through major reforms exists only till around October, after which Assembly elections would take off in six States.

“Any Bill to be passed would have to be taken up in the Monsoon session, starting next month. “While there is also the winter session after that, it would be politically difficult to enact any big-ticket legislation then”, he pointed out.

The Finance Minister, Mr P. Chidambaram, on Wednesday, stated that the Government will ‘try’ to take up various pending Bills in the coming session itself. These pertain to raising the existing 26 per cent foreign direct investment (FDI) limit in insurance companies to 49 per cent, removing the 10 per cent individual voting rights cap in banks and conferring statutory status to the Pension Fund Regulatory and Development Authority.

“Getting each of them passed is akin to surviving a fresh trust vote. After all the bad blood created in the recent vote, it would take some deft manoeuvring to obtain the support of the main Opposition, Bhartiya Janata Party (BJP), leave alone the Left”, the official said.

While the Government’s new ally, Samajwadi Party (SP), has indicated that it is open to pension, banking and insurance reforms, “it is risky to rely just on their numbers, more so after all the recent horse-trading allegations”.

The official was also pessimistic on FDI being permitted in retail, even if it involves no legislation per se. “Forget SP, even sections within the Congress are dead opposed to it”, he added.

Possible areas
So what reforms can one realistically expect? Disinvestment is one area that could see some action. With the Left off its back, the Government is planning to go full steam with the initial public offerings (IPO) of NHPC Ltd and Damodar Valley Corporation (DVC).

Confirming this, the Minister of State for Power, Mr Jairam Ramesh, told Business Line, “We will complete the NHPC IPO by September-October, if market conditions permit”.
The company is slated to issue 10 per cent fresh equity and offload five per cent through an offer for sale, which will reduce the overall Government stake to 86.3 per cent.

Study under way
In the case of DVC, the Government has already commissioned KPMG to work out the modalities for going public. “DVC is a statutory corporation that was, in fact, created 60 years back through an Act of the Constituent Assembly. The consultant is examining various options, including floating of a subsidiary that can be listed without the need to amend the Act relating to the parent company”, Mr Ramesh said.

The Government also wants to list companies such as Satluj Jal Vidyut Nigam and North Eastern Electric Power Corporation, though these are unlikely to happen in the current Government’s term, Mr Ramesh admitted.

Source: The Hindu Business Line