Disinvestment proceeds spent only to meet fiscal deficit: CPM

New Delhi: Countering government's justification for divesting stakes of PSUs, CPI(M) has said that the disinvestment proceeds were only being spent to meet fiscal deficit instead of being used for capital expenditure and social sector schemes.

"Fact remains that the government is losing dividend income more and more as it proceeds to off-load its share in the CPSEs in the market in regular frequency. Dividend is a recurring flow to government. Foregoing a part of such recurring flow of income for one-time sale proceeds does not speak about economic prudence," senior CPI(M) leader Sitaram Yechury has said.

In a letter to Minister of State for Finance Nirmala Sitharaman on public sector divestment, he said, "Your own communication has conclusively shown that the very concept of National Investment Fund (NIF) for parking disinvestment proceeds to be utilised for capital expenditure as well as social sector schemes is yet to take-off fully even after eight years after its constitution.

"And disinvestment proceeds realised during this period have all gone to meet the fiscal deficit and nowhere else." In her letter to Yechury, the minister had said the government in 2009, had exempted the use of NIF funds from capital expenditure and social sector scheme.

This exemption was later extended till March 2013. She had also said that disinvestment and listing of CPSEs in stock exchanges improved corporate governance and helped realising the productive potential of these enterprises through improved efficiency and profitability.

Responding to this, Yechury said improving governance of CPSEs depends on other factors and "ups and down in stock market has got little to contribute. Stock market movements suffers from various kinds of manipulations too". "How can one explain a public sector company having same standard of profitability, turnover etc. is priced lower than a private sector company with almost same or even lower parameters," the CPI(M) leader asked.

He also asked the government to consider that "listing in stock exchanges should not be made a condition for CPSEs for retaining their Maharatna or Navaratna status".