'$200 bn possible from PSU stake sale'

India's public sector undertakings have a combined value of $300-400 billion which means by disinvesting half of its stake in them, the government could raise roughly $200 billion, reason enough for it to embark on a more ambitious disinvestment programme, the 13th Finance Commission has said. Commission chairman Vijay Kelkar said on Friday such large disinvestment proceeds could be invested in green technology and urban infrastructure, both of which are imperatives for sustainable economic growth.

"Such a policy would merely amount to a reshuffling of public sector assets to create new environmental assets and would be a win-win situation for all," he said.

Kelkar's comments come at a time when the government is on the verge of an aggressive disinvestment drive, though much less magnitude than what the Finance Commission envisaged, and is planning to use the proceeds to fund social sector schemes.

"On a mark-to-market basis, we estimate that the value of all Indian PSUs both listed and unlisted at about $ 300 billion to $ 400 billion," Kelkar said, at he said at the release of Green India, 2047, a report by The Energy and Resources Institute.

Under UPA's new disinvestment policy, profitable PSUs will be listed on stock exchanges and the public float of listed PSUs will be raised to 10%. So far, the department of disinvestment has identified about 60 PSUs that meet its criteria.

As part of its terms of reference, the TFC has been mandated to study ways to manage the ecology, environment and climate change consistent with sustainable development in the period between 2010 and 2015. The panel, which has to submit its report by December 31, also plans to incentivise states that work to conserve the environment. "We are looking at possibilities for environmental federalism. Three areas where states can be given incentives include forests, green energy and water," Kelkar said.

While Kelkar has recommended using disinvestment proceeds for environmental sustainability and conservation, the funds can help shave off a significant portion of the Centre's fiscal deficit, estimated at 6.8% of the GDP or Rs 4,00,996 crore in 2009-10. Experts however said this can only be a stop-gap arrangement. "The relief provided by disinvestment proceeds can only be temporary in nature and bold reforms are needed to control the fiscal deficit," warned DK Joshi, chief economist Crisil.

Rajiv Kumar, director and chief economist of Icrier said, "The important thing is to first privatise the loss making PSUs as they are haemorrhaging government finances. Then profit making PSUs should be listed to raise funds. But the government is going the other way as it needs money."

Panel to look into water conservation

The Centre has set up a Cabinet Committee on Water under the chairmanship of agriculture minister Sharad Pawar to work for effective conservation of water resources. "It will look at new ways of water management via legislation as well as issues of water pricing...," environment minister Jairam Ramesh said on Friday. Pointing out that Prime Minister Manmohan Singh is very concerned about water management, Ramesh said, "It is a very difficult issue and is largely looked at by state and local bodies. The panel will coordinate with them."