The Standing Committee on Finance, headed by Bharatiya Janata Party (BJP) leader, Yashwant Sinha, has opposed disinvestment of Government stake in public sector companies via offer-for-sale route through stock exchanges.
Instead, the Government should look for market penetration and encourage retail investors, the panel said in a report tabled in the Lok Sabha on Monday.
The Standing Committee also reiterated that Government should formulate a coherent disinvestment policy with clear direction and vision.
In the absence of concrete disinvestment policy, the disinvestment proceeds over the years have been treated as “selling family’s silver to pay grocery bills,” the report noted.
All disinvestment proceeds being used for revenue expenditure are not socially justified. When the Government disposes of one asset, proceeds from there should be used only for fresh asset creation, it said.
The earlier recommendations made by the committee in this matter were not heeded by the Government, it added. As a result, the corpus of National Investment Fund (NIF) is left with a meagre amount of Rs 1,814 crore for investment purposes.
Considering the low balance in NIF and its impact on returns, the Committee said it was not convinced with the proposal of using the budgeted disinvestment proceeds of Rs 40,000 crore in 2013-14 for recapitalisation of public sector banks (PSBs) and towards budgetary support for the Railways.
The Government could easily find resources for capitalisation of PSBs through early setting up of financial holding company/ internal resource of PSBs.
Similar steps may also be taken for Indian Railways, the report said.
The Standing Committee also asked the disinvestment department to conduct a study regarding return on disinvestment of Central Government's equity and apprise the panel within three months.