The Hindu Business Line : Strategic sale method flawed: Chidambaram <br>`Divestment process not on back burner'

THE Finance Minister, Mr P. Chidambaram, on Wednesday defended the Government's decision to dump the strategic sale route for disinvestment in profit-making public sector undertakings, and said that the system was flawed since it "raised more questions than it answered."

Briefing newspersons here on Wednesday, Mr Chidambaram said that the strategic sale route often resulted in disputes over the modalities, besides, rendering the Government open to criticism.

"The strategic sale route is not the right way to go about it. It will simply not work in India," the Finance Minister said. The Government had on Tuesday said that it had decided not to adopt the strategic sale route for disinvestment in 13 profit-making PSUs.

Mr Chidambaram pointed out that doubts were expressed over the fairness of various aspects of strategic sale starting from the appointment of valuers, the process of valuation and fixing of the reserve price.

He said that often the process threw up a single bidder, thereby, raising doubts over the openness and competitiveness of the process. "In the past, there were instances of strategic sale (under the previous NDA Government) where there were only single bidders as in the case of some hotels. This raises doubt on whether the process is truly open and truly competitive," he added.

He said that even the post-closure adjustment claims clause incorporated during the NDA Government for the strategic sale route was also flawed. "There were cases were the post-closure claims exceeded the bid amount," he pointed out.

Earlier during the day at a separate function, Mr Chidambaram said that disinvestment had not been put on the back burner. He said that the process would be furthered on after more discussions with the Left parties. ``Disinvestment is not in the back burner," he said, on the sidelines of a conference of National Consumer Dispute Redressal Commission here.

On BHEL disinvestments, Mr Chidambaram said that the process has been stayed and would be taken up only after wider discussions with the Left parties. "We have not taken any fresh decision. We are holding discussions with Left parties," he said.

Mr Chidambaram also pointed out that reduction of Government stake in PSU banks below 51 per cent was never in the agenda of the UPA Government. "PSU banks will remain PSU banks. The Government holding will remain at a minimum 51 per cent till the UPA Government is there," he said.

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