FM rules out divestment in volatile market

Finance minister Pranab Mukherjee on Friday indicated that the government would not disinvest its shares in any public sector company under the current volatile stock market conditions.

"I am fully aware of the current volatile situation in the market, and surely not only me, any prudent finance minister would not like to dispose of valuable assets," Mukherjee said in the Lok Sabha, while answering questions on the government's disinvestment policy.

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"We cannot sell our valuable assets in a market situation where we will not get adequate prices. The whole objective is to discover the latent price," he explained. The real value of a company is discovered when it is traded on the stock exchanges, Mukherjee said.

As an example, he pointed out that the Rs 10 share value of Coal India Limited (CIL), which as per the book value mechanism would be just Rs 52, currently trades at Rs 387. The government plans to raise Rs 40,000 crore through the sale of shares in public sector enterprises during the current financial year.

It has already approved disinvestment of five per cent paid-up equity capital of Oil and Natural Gas Corporation Limited (ONGC) and Steel Authority of India Limited (SAIL). Mukherjee on Friday also reviewed the global economic situation with Reserve Bank of India governor Duvvuri Subbarao and the chairman of the Prime Minister's Economic Advisory Council, C. Rangarajan.

The discussions focused on the slow economic growth in the US and debt worries in the euro zone. Europe's debt problem and worries about the world economy had resulted in a sharp fall in the US and European markets, according to the finance ministry. Stocks that were particularly affected in the US were those of companies that have global presence.

"Indian markets contracted by 1.9 per cent, which is only around onethird of the fall seen in the US and European markets. In comparison to Asian markets also, our performance has been better," said a statement by the ministry.

The finance minister said that the country's economy is robust and its growth story intact. Its fundamentals are strong and they look more attractive in a world confronting problems.

Courtesy: Mail Today