PM hints at PSU disinvestment in Budget '09-'10

Prime Minister Manmohan Singh on Thursday indicated that the full Budget for 2009-10 may announce a disinvestment of government stake in public sector companies.

"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 second round of swearing in of Union ministers at Rashtrapati Bhawan.

The prime minister said economic growth would not come at the cost of fiscal prudence. "We would ensure economic growth momentum but at the same time fiscal prudence will be kept in mind," he said.

A host of companies waiting for the government nod for disinvestment include Bharat Sanchar Nigam Ltd, railway consultancy firm RITES, National Aviation Company, and Ircon.

The government has already cleared the disinvestment of National Hydroelectric Power Corporation Ltd and Oil India but could not tap the capital market due to the prevalent negative sentiment.

Fund mobilisation by the government by way of initial public offers declined in 2008. There was only one PSU IPO, which was that of Rural Electrification Corporation, worth Rs 1,421 crore (Rs 14.21 billion).

In 2007, there were four PSU IPOs, including those of Power Grid Corporation and Power Finance Corporation, worth Rs 5,580 crore (Rs 55.8 billion).