|Speech of Shri
Finance Minister, Government of India
27th February, 1999
Public Sector Reform/Disinvestment/Privatisation
40. Governments strategy towards public sector enterprises will continue to encompass a judicious mix of strengthening strategic units, privatising non-strategic ones through gradual disinvestment or strategic sale and devising viable rehabilitation strategies for weak units.
41. The disinvestment programme of the Government draws primarily upon the recommendations of the Disinvestment Commission. The Commission has so far submitted 8 Reports containing recommendations for 43 Public Sector Enterprises (PSEs). These recommendations are in various stages of implementation. Government will be referring more PSEs to it for its valued opinion. In 1999-2000, I propose to raise Rs.10,000 crore through the disinvestment programme. This will help the Government to fund the requirements of social and infrastructure sectors. Equally important, it will lead to improvements in productivity and profitability of these enterprises and also to the further development of domestic capital markets.
42. Government have been providing budgetary support to Central PSEs for rationalising manpower under the Voluntary Retirement Scheme (VRS). However, such assistance has generally been restricted to loss making enterprises. There are a number of enterprises which are marginally profit-making and which need to reduce manpower to remain viable but do not have the resource to finance such rationalisation exercises. Government would encourage such enterprises to raise money from banks against Government guarantees and interest subsidy.
43. In order to reduce the burden on budget on account of the implementation of VRS, Government will also encourage PSEs to issue bonds to the workers opting for VRS. Government will guarantee the repayment of such bonds and also reimburse fully the interest payments. RBI will be requested to issue necessary instructions to banks to accept bonds as collateral for loans to workers who may need assistance.
44. The need for timely and reliable statistics for policy formulation and planning cannot be over emphasised. There is reason to believe that with progressive dismantling of the system of economic controls, the quality of data flows has weakened. Government has decided to establish a National Statistical Commission to critically examine the deficiencies of the present statistical system with a view to recommending measures for a systematic revamping of the system.
45. We stand today at the edge of the second millennium. We must, therefore, prepare for the opportunities and challenges of the next century and millennium. It is time to seriously debate and decide on the second generation reforms that we must put in place to make India economically strong and fully capable of competing successfully in the evolving world order. To further this process, I plan to bring a discussion paper before Parliament before the end of this Budget Session. My goal is to help build a consensus on the basic issues so that we can act more decisively to raise the growth in income, output and employment in our economy to a higher, sustainable level.