Disinvestments Development Picks Positive Energy Over - May 26, 2009

After Congress led UPA government won the decisive mandate in the recently held general elections without the support of communist parties, the talk of disinvestments in government owned firms is doing the rounds again. One of the few options before the UPA regime is the offloading of government''s stakes in its profit making companies in order to deal with the fiscal deficit as well fill its coffers but also earn kudos from India inc and from small retail investors.

The government is already having two proposals in the pipeline- oil and gas explorer Oil India and National Hydropower Corporation, which are waiting to hit their respective issues in the primary market.

There are 60 plus profitable PSUs which are to be listed. The focus on these 60 companies and plan 8 to 10 disinvestment over the year for the next five years. The government holdings in listed state-owned companies are estimated at over Rs 800,000 crore. A 10% stake dilution in top ten PSUs in terms of market valuation itself can bring in a whopping Rs 90,000 crore.