Date:07/07/2006 URL: http://www.thehindubusinessline.com/2006/07/07/stories/2006070704230100.htm

Back PM puts divestment on hold

Our Bureau

Move follows DMK threat to withdraw support to UPA Govt on sale of NLC shares

Sudden brake
DMK Ministers meet PM to convey party stand
Move in national interest, say Left parties
NMDC, PFC issue plans look uncertain

New Delhi , July 6

The Prime Minister, Dr Manmohan Singh, today put on hold all divestment decisions and proposals, including sale of shares in public sector firms Neyveli Lignite Corporation (NLC) and National Aluminium Company Ltd (Nalco), after one of its key allies, the DMK, threatened to withdraw support to the UPA Government if it went ahead with sale of NLC shares.

"There have been representations from some of the constituents and allies of the UPA about the process of divestment in some public sector enterprises. Taking into account their concerns, the Prime Minister has decided to keep all divestment decisions and proposals on hold pending further review," said the Prime Minister's Office in a statement.

The statement came on the heels of an announcement in Chennai by the DMK chief and Tamil Nadu Chief Minister, Mr M. Karunanidhi, earlier in the day that his party was reconsidering the continuation of its support to the Centre on the issue.

This is the second time around that the Government has backtracked on the divestment issue. Last year, under severe pressure from the Left parties, the Government was forced to keep on hold its decision to divest 10 per cent equity in BHEL. Mr Karunanidhi, who had come out strongly opposing the Centre's decision to divest 10 per cent in profit-making Tamil Nadu-based NLC, today instructed the DMK Ministers in the Union Cabinet to convey the party stand on the issue to the Prime Minister.

Union Ministers Mr Dayanidhi Maran and Mr A Raja met with Dr Singh in the afternoon, following which the PMO came out with the statement.

Welcoming the Government decision, Left parties today said that such a move was in the national interest and their "pressure" on the Centre was not meant to destabilise it.

"We think that this sort of divestment is neither in the interest of the country or of public assets. Keeping this in mind, we had opposed it," said CPI (M) Polit Bureau member, Mr Sitaram Yechury.

The CPI (M) General Secretary, Mr Prakash Karat, said that his party "appreciated" the stand taken by Mr Karunanidhi in defence of the public sector. "We congratulate the employees of the two public sector undertakings for their firm struggle against the divestment," he said in a statement.

On June 22, the Cabinet Committee on Economic Affairs (CCEA) had approved sale of 10 per cent Government stake in both NLC and Nalco, a move through which the Government was expecting to raise an estimated Rs 2,500 crore at the time of the decision.

The entire proceeds from the divestment exercise was to be transferred to the proposed National Investment Fund (NIF), with 75 per cent of the amount to be used in social sector schemes and the rest in reviving sick public sector units.

Besides NLC and Nalco, sale of Government equity in National Mineral Development Corporation (NMDC), which had been decided earlier, would also be put on hold.

Power Finance Corporation's proposed public float, where the company was to raise fresh capital along with a five per cent sale of Government stake, also looks uncertain.Meanwhile, the opposition BJP flayed the Government for keeping on hold its divestment plans, terming the move a "compromise with economic reforms" because of political pressure. "This clearly shows that the UPA is not committed to reforms, but is committed to power only. The Prime Minister has compromised the UPA's own pro-reform agenda," a BJP spokesperson said.