The Hindu : New Delhi News : Chidambaram not for divesting Navaratna PSUs

Online edition of India's National Newspaper
Friday, May 28, 2004

New Delhi

New Delhi

Chidambaram not for divesting Navaratna PSUs

NEW DELHI, MAY 27. Describing as "sacrosanct" the Navaratna PSUs which should remain under government control, the Union Finance Minister, P. Chidambaram, said on Wednesday that disinvestment could be considered as an option for those PSUs that were not making profits and were vulnerable to global competition.

"What we need to do is, clearly draw a line between the enterprises which will not be privatised and PSUs which we can look at as an option for disinvestment,'' Mr. Chidambaram told NDTV.

Disfavouring disinvestment of the Navaratna companies such as ONGC, Indian Oil, HPCL, BPCL, NTPC and SAIL, Mr. Chidambaram, who started his second stint at North Block, said he had drawn the line in 1997 and decided to keep the Navaratnas out of the privatisation process. "They (Navaratnas) are the jewels. We will give them full commercial and managerial autonomy. They can do whatever they like as long as government is the owner,'' he said, adding that once these companies were "ring-fenced," half of the problem of disinvestment was over.

``You build a ring fence around Navaratnas and say they are sacrosanct. Then you look at the rest,'' he said. Of the remaining PSUs, he said a simple test could be performed to find out whether they could survive global competition and still run on profit.

"Can you function, make profits in an open global economy. If you convince me that you can, you (the PSU) can remain in public sector,'' was what Mr. Chidambaram had to say about the remaining PSUs.

Tax reforms

Mr. Chidambaram, who has already started his budget-making exercise, was given a detailed presentation on tax reforms by Vijay Kelkar yesterday.

The Kelkar panel recommendations on toning up tax administration and computerisation of the tax system have mostly been carried out by the NDA Government, but the difficult task of phasing out exemptions and widening tax base with lower rates are yet to be carried out as they could be politically unpopular.

The Prime Minister, Manmohan Singh, and Mr. Chidambaram had indicated in the past that the Kelkar recommendations would form the basis of tax reforms.

However, all agreed that the `big bang' approach of carrying out all the reform measures would not be feasible, as it would put pressure on taxpayers.

On bringing down customs duties, the Government has already set to motion the process and it is only to be carried forward.

In fact, it was Mr. Chidambaram, in his earlier avatar in the United Front Government, who had promised to bring it down to South-east Asian levels, which is precisely what Mr. Kelkar has suggested. — PTI

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