rediff.com: Cabinet unanimous about divestment says Yashwant Sinha

Finance Minister Yashwant Sinha said the government had taken key decisions to achieve the revenue target from a privatisation programme in the current fiscal year.

Sinha told Doordarshan in an interview telecast on Sunday that the cabinet had a consensus on divestment but was working out the schedule and the ways of doing it. The government has set a target of 100 billion rupees for 2000/01 (April-March) but there have been concerns that it is going slow on the issue.

"To achieve the objective of raising 100 billion rupees, all the decisions which were needed to be taken have been taken," Sinha said. He signaled that the government was ready to see its stakes come below 50 percent in state-run banks, which are planning to issue shares.

"Banks need capital. If in the process of their raising capital the government stake goes below 50 percent, then we are ready to accept it on the condition that their public character is not affected," Sinha said. The government also planned to crack down on 'willful defaulters' to strengthen state-run banks, Sinha said.

Sinha said the government planned to amend a banking law on state-run banks so that government will have its way on top-level appointments in the banks even if its stakes were in a minority.

The minister said the 'biggest worry' for the Indian government was the high fiscal deficit but added that he planned bold new measures to control state spending. These include a fiscal responsibility legislation to force expenditure control, he said.

In wide-ranging interviews in Hindi and English broadcast one after another, Sinha also said faster reforms could boost India's economic growth to eight to 10 percent a year from the current 6.5 to 7.0 percent. "In seven or eight years, we can free ourselves from poverty," the former bureaucrat said.

A key aspect of the current 'second generation' reforms is the divestment programme. But there have been concerns that the government is moving too slow. A cabinet meeting recently laid down a long list of firms whose stakes were up were sale, but markets were disappointed by the absence of fresh decisions on oil, telecom and manufacturing companies.

Sinha said the cabinet was pushing the programme and detailed decisions were expected soon. "I believe there are no internal differences. They are more or less non-existent," Sinha said.

"My belief is that under the prime minister's leadership, all ministers are agreed that there should be divestment. On how fast this should be done, we made a programme. The CCD (cabinet committee on divestment) will sit again to think about it."

The government was also eyeing recommendations expected soon from an expenditure control commission and will launch 'zero-based budgeting' next year, Sinha said.

Zero-based budgeting refers to a practice under which government departments do not carry over previous year's expenditures routinely and instead focus on actual needs. The government aims to control fiscal deficit to 5.1 percent of the Gross Domestic Product in 2000/01 from 5.6 percent in the previous year.

Sinha spoke at length on challenges facing the government in eradicating poverty among its one billion citizens. In the Hindi interview, he patiently defended privatisation. He said the government faced a big challenge in pleasing both pro-market reformers and the people.

"Political rhetoric of reform will have to be different for different people," he said. "I can't mix the idiom."

(c) Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.


	HOME \| MONEY \| REUTERS \| REPORT