I. 1. The Department of Disinvestment was set up vide Notification No. CD /551/99 dated 10.12.1999. Vide Notification No. CD-442/2001 dated 6^th September 2001, the Department of Disinvestment was renamed as Ministry of Disinvestment. The Ministry has been assigned the following work:

(a) All matters relating to disinvestment of Central Government equity from Central Public Sector Undertakings.

(b) Decisions on the recommendations of Disinvestment Commission on the modalities of disinvestment, including restructuring.

(c) Implementation of disinvestment decisions, including appointment of Advisors, pricing of shares, and other terms and conditions of disinvestment.

                   (d) Disinvestment Commission.

(e) Central Public Sector Undertakings for purposes of disinvestment of Government equity only.

 

I. 2 The Government of India vide its Order No. 1/11/1/2000-Cab dated 11^th October, 2000 has constituted the Cabinet Committee on Disinvestment with composition and functions as mentioned below:-

1. Prime Minister.

2. Minister of Heavy Industries and Public Enterprises

3. Minister of Petroleum and Natural Gas

4. Minister of External Affairs

5. Minister of Finance

6. Minister of Civil Aviation

7. Deputy Chairman, Planning Commission,

8. Minister of Law, Justice and Company Affairs

9. Minister of Disinvestment

The Minister of the Administrative Ministry concerned with the public sector enterprise, whose proposals come up for consideration will be invited to the meetings of the Committee.

ii)  To decide the price band for the sale of Government shares through GDR/domestic capital  market route prior to the book building exercise, and to decide the final price of sale in all cases;

iii)  To decide the final pricing of the transaction and the strategic partner in case of the strategic sales;

iv)  To decide on cases where there is disagreement between the recommendations of the Disinvestment Commission and the views of the Ministry of Disinvestment; and

v)   To approve the three year rolling plan and the annual programme of disinvestment every year.

Note: Decisions in respect of (ii) above may be taken by the Minister of Finance, Minister of Heavy Industry and Public Enterprises, Minister of Disinvestment and the Minister of the Administrative Ministry concerned with the public sector enterprise whose proposals come up for consideration.

I. 3 ORGANISATIONAL STRUCTURE

The organisational set up of the Ministry is as depicted below :

I. 4 The Secretary (Disinvestment) is also assisted by the Joint Secretaries of the Administrative Ministries/Departments managing the PSUs under disinvestment in their respective Ministries/Departments. The Joint Secretaries concerned in the administrative Ministries are responsible to Secretary (Disinvestment) for disinvestment work.

I.5 All the disinvestment work of the Ministry is handled at Officers’ level with minimal supporting staff.

 It is appropriate to refer to the background of public ownership of industries before setting out the objectives of/rationale for disinvestments.

II. 1. Background of Public Ownership

Main reasons for the state ownership of industries could be stated as under: -

(a) Historically, the development of public enterprises was seen as an appropriate policy response to bring about improvements in the economy, both in the developed as well as the developing countries. There appeared to be an economic consensus around the world accepting public enterprises as an inevitable part of the economy, especially to manage natural monopolies and also the core industry. While the public sector contributed significantly to the development effort, the low rates of return on such investments and the inability of government to finance the growing demands of such industries changed the consensus in favour of economic liberalisation and privatisation from the 1970’s, in almost all countries.

(b) Such industries could not have been developed by private sector during 1940’s or 1950’s as there was not enough money in the money market and entrepreneurship was limited. So Government used high rates of taxation and deficit financing to develop the public industries.

(c) Rescue Missions / Nationalisation – At times Government had to step in to rescue certain enterprises, whose closure could result in significant loss of jobs and also because of several other economic and social reasons.

(d) Control of strategic sectors – Another rationale for state ownership was the beliefs that state investment in and the control of the strategic sectors of the economy was necessary for the economic development of those sectors and the security of the country.

(e) Developing the economy – A few Public Sector Enterprises were established to balance or replace weak private sectors, to develop the industrially backward areas, to generate employment and to make goods available at lower cost.

II. 2 Evolution of Public Sector Policy in India

2.2 Within a decade of laying down the policy parameters in 1948, another policy statement was issued in April 1956 by the Government to give a new orientation to the "mixed economy" concept. This Policy categorised industries into three groups:

(i)   Industries exclusively reserved for development by the State viz., arms and ammunitions, iron & steel, heavy castings and forging, heavy plant & machinery required for iron and steel production and mining, heavy electrical plant, coal and lignite, zinc, copper, lead, aircraft, ship building and telecommunication equipment.

ii)   Industries, which would progressively be State owned and in which the State will therefore, generally take the initiative in establishing new undertakings but in which private enterprise will also be expected to supplement the efforts of the State. These included aluminium, fertilizers, other minerals, machine tools, ferro-alloys and tools, basic and intermediate products required by chemical industries, antibiotics and other essential drugs, synthetic rubber, carbonisation of coal, chemical pulp, road transport and sea transport.

2.3 In the context of the significant changes in fiscal, monetary, trade and industrial policies, the need for a review of the continued presence of the public sector in a wide range of activity was felt in the nineties. A new strategy for the public sector was spelt out in the policy statement in July 1991, which marked a turning point in the policy guidelines as far as public sector was concerned. The philosophy behind the New Economic Policy (NEP) was that the State should, by and large, leave industry and commerce to the private sector and concentrate on those areas where it had a special or unique responsibility.

2.4 The broad features of July 24, 1991 reforms New Industrial Poloicy were as follows:

(i) Portfolio of public sector investment would be reviewed with a view to focus the public sector on strategic, high-tech and essential infrastructure. Whereas some reservation for the public sector was being retained, there would be no bar for areas of exclusivity to be opened up to the private sector selectively. Similarly, the public sector would also be allowed entry in areas not reserved for it.

2.5 Other developments since then were:

(i) Dereservation of mining activity. With this coal extraction has been permitted for captive use by user industries.

(ii) Invitations have been extended to private sector to invest in oil exploration and refining, otherwise reserved for public sector, as well as infrastructure projects like roads, ports, telecom etc.

(iii) Private sector venture in power generation even with 100% foreign equity has also been allowed.

II. 3 The need for Disinvestment / Privatisation

3.1 One basic rationale for privatisation is the concept that private ownership leads to better use of resources and their more efficient allocation. Throughout the world, the preference for market economy received a boost after it was realised that the State could no longer meet the growing demands of the economy and the State shareholding inevitably had to come down. The ‘State in business’ argument thus lost out and so did the presumption that direct and comprehensive control over the economic life of citizens from the Central government can deliver results better than those of a more liberal system that directly responds according to the market driven forces.

3.2 Another reason for adoption of privatisation policy around the globe has been the inability of the Governments to raise high taxes, pursue deficit / inflationary financing and the development of money markets and private entrepreneurship.

3.3 Further, technology and W.T.O commitments have made the world a global village and unless industries, including PSEs do not quickly restructure, they would not be able to survive. Public enterprises, because of the nature of their ownership, can restructure slowly and hence the logic of privatisation gets stronger. Besides, techniques are now available to control public monopolies like Power and Telecom, where consumer interests can be better protected by regulation / competition, and investment of public money to ensure protection of consumer interests is no longer a convincing argument.

3.4 The objectives of the disinvestment programme vary from improving efficiency of the Public Sector Enterprises to transformation of the society for making Indian economy more vibrant, healthy and adequately equipped to contest in global arena.

3.5 The primary objectives for privatising the PSEs are as follows:

      <    releasing the large amount of public resources locked up in non-strategic PSEs, for redeployment in areas that are much higher on social priority, such as, public health, family welfare, primary education and social and essential infrastructure;

       <   stemming further outflow of these scarce public resources for sustaining the unviable non-strategic PSEs.

        <   reducing the public debt that is threatening to assume unmanageable proportions,

        <    transferring the commercial risk, to which the tax-payer’s money locked up in the public sector is exposed, to the private sector wherever the private sector is willing and able to step in – the money that is deployed in the PSEs is really the public money; and, is exposed to an entirely avoidable and needless risk, in most cases.

3.6 The other benefits expected to be derived from privatisation are: -

<  Disinvestment would result in wider distribution of wealth through offering of shares of privatised companies to small investors and employees.

<  Disinvestment would have a beneficial effect on the capital market; the increase in floating stock would give the market more depth and liquidity, give investors easier exit options, help in establishing more accurate benchmarks for valuation and pricing, and facilitate raising of funds by the privatised companies for their projects of expansion, in future.

<  Opening up the erstwhile public sectors to appropriate private investors would increase economic activity and have an overall beneficial effect on the economy, employment and tax revenues in the medium to long term.

<  In many areas, e.g., the telecom sector and petroleum sectors the end of public sector monopoly would bring relief to consumers by way of more choices, and cheaper and better quality of products and services – as has already started happening.

CHAPTER-III

III. 1 PHASE - I

The policy of the Government on disinvestment has evolved over a period and it can be briefly stated in the form of following policy statements made in the chronological order:

A. Interim Budget 1991-92 (Chandrashekhar Government)

Policy   : To divest up to 20% of the Government equity in selected PSEs in favour of public sector institutional investors.

B. Industrial Policy Statement of 24^th July, 1991

C. Budget Speech :1991-92 (Congress Government)

"… emphasized the need for substantial disinvestment, and stated that while the percentage of equity to be divested should be no more than 49% for industries explicitly reserved for the public sector, it should be either 74% or 100% for others."

E. The Common Minimum Programme of the United Front Govt.: 1996

Policy:

• To carefully examine withdrawal from non-core strategic areas
• To set up a Disinvestment Commission for advising
• To take and implement decisions to disinvest in a transparent manner
• Job security, opportunities for retraining and redeployment to be assured.

F. Disinvestment Commission Recommendations: Feb.1997- Oct. 1999

(i) 72 PSEs were referred to the Disinvestment Commission during 1996-99 The Disinvestment Commission gave its recommendations on 58 PSEs.

(ii) The Disinvestment Commission recommendations gave priority to strategic/trade sales, with transfer of management, instead of public offerings, as was recommended by the Rangarajan Committee in 1993 also. The following table gives the details:

III. 2 PHASE - II

Policy:

• To bring down Government shareholding in the PSUs to 26% in the generality of cases, (thus facilitating ownership changes, as was recommended by the Disinvestment Commission).
• To retain majority holding in PSEs involving Strategic considerations.
• To protect the interest of workers in all cases.

Policy:

• To strengthen strategic PSUs
• To privatise non-strategic PSUs through gradual disinvestment or strategic sale
• To devise viable rehabilitation strategies for weak units

Cabinet classified the PSUs into strategic and non-strategic areas.

• Strategic PSUs:

• Defence related
• Atomic energy related, with some exceptions
• Railway transport

• Non-strategic PSUs:

• All others

Reduction of Government stake to 26% to be worked out on a case to case basis, on the following considerations:

1. Whether the Industrial sector requires the presence of the public sector as a countervailing force to prevent concentration of power in private hands, and

 

2. Whether the Industrial sector requires a proper regulatory mechanism to protect the consumer interests before Public Sector Enterprises are privatised.

Policy: The main elements:

• To restructure and revive potentially viable PSUs
• To close down PSUs which cannot be revived
• To bring down Government equity in all non-strategic PSUs to 26% or lower, if necessary
• To fully protect the interest of workers

• To put in place mechanisms to raise resources from the market against the security of PSUs’ assets for providing an adequate safety-net to workers and employees

• To establish a systematic policy approach to disinvestment and privatisation and to give a fresh impetus to this programme, by setting up a new Department of Disinvestment

• To emphasize increasingly on strategic sales of identified PSUs

• To use the entire receipt from disinvestment and privatisation for meeting expenditure in social sectors, restructuring of PSUs and retiring public debt

D. Budget Speech: 2001 - 2002

To use the proceeds for providing –

• Restructuring assistance to PSUs
• Safety net to workers
• Reduction of debt burden
• Additional budgetary support for the Plan, primarily in the social and infrastructure sectors (contingent upon realization of the anticipated receipt.)

E. Excerpts from Budget Speech: 2002-2003

"With the streamlined procedure for disinvestment and privatization, I am happy to report that the Government has now completed strategic sales in 7 public sector companies and some hotel properties of the Hotel Corporation of India (HCI) and the India Tourism Development Corporation (ITDC). The change in approach from the disinvestments of small lots of shares to strategic sales of blocks of shares to strategic investors has improved the price earning ratios obtained……"

IV. 1 As the term of the first Disinvestment Commission has expired in the year 1999, a new Disinvestment Commission has been constituted in the month of July 2001. The Composition of the Disinvestment Commission is as under:

1. Dr. R.H. Patil                  -              Chairman

2. Shri N.V. Iyer                  -               Member

3. Shri T.L. Shankar           -               Member

4. Dr. V.V. Desai                -               Member

5. Prof. K.S.R. Murthy        -                Member

IV. 2 Terms Of Reference

The terms of reference are as follows:

(i) It shall be an advisory body and its role and function would be to advise the Government on Disinvestment in those public sector units that are referred to it by the Government.

(ii) It shall also advise the Government on any other matter relating to disinvestment as may specifically be referred to it by the Government, and also carry out any such other activities relating to disinvestment as may be assigned to it by the Government.

(iii) In making its recommendations, it will also take into consideration the interest of workers, employees and other stakeholders, in the public sector unit(s).

(iv) The final decision on the recommendations of the Disinvestment Commission will vest with the Government.

IV.3 Reference of all Non-Strategic PSEs including their subsidiaries to Disinvestment Commission

          The Government has decided to refer to the Disinvestment Commission "non-strategic" Public Sector Enterprises (PSEs) including their subsidiaries, excluding IOC, ONGC & GAIL. Since such PSEs would be quite large in number, the Commission would prioritise the cases and make recommendations to the Government.

           The Disinvestment Commission has started giving its reports and has recently given its proposals on Neyveli Lignite Corporation Ltd. (NCL), Manganese Ore (India) Ltd. (MOIL), Rail India Technical & Economic Services Ltd. (RITES), and Projects & Equipment Corporation Ltd. (PEC). These reports are being examined.

The present policy & procedure for disinvestment:

V. 1 The apex decision-making body on disinvestments matters is the Cabinet Committee on Disinvestment headed by the Prime Minister. A Core Group of Secretaries on Disinvestment headed by the Cabinet Secretary deliberates on various aspects of disinvestments program in the following manner.

On the recommendations of the Disinvestment Commission or of the other expert bodies, or on the basis of decisions taken in consultation with the administrative Ministry, the Ministry of Disinvestment initiates proposals and places them for the consideration of the Core Group of Secretaries on Disinvestment.

The decisions taken by the Core Group, in the form of recommendations, are then submitted for the consideration of the Cabinet Committee on Disinvestment and a final decision is obtained.

V. 2 Procedures for disinvestment

Government of India is carrying out disinvestments in accordance with the prescribed procedure that ensures complete transparency. The procedure is reviewed from time to time and modified with a view to accelerating the process further. At present it is as follows:

• Proposals for disinvestments in any PSU, based on the recommendations of the Disinvestment Commission or in accordance with the declared Disinvestment Policy of the Govt., are placed for consideration of the Cabinet Committee on Disinvestment (CCD).

• After CCD clears the disinvestments proposal, selection of the Advisor is done through a competitive bidding process.

• After receipt of the Expression Of Interest, in pursuance of Advertisement in newspapers/website, prospective bidders are short listed based on objective screening in the light of announced criteria/requirements.

• The advisors, after due diligence of the PSU, prepare the information memorandum in consultation with the concerned PSU. This is given to the short listed prospective bidders who have entered into a confidentiality agreement.

• The draft share purchase agreement and the shareholder agreement are also prepared by the Advisor with the help of the legal Advisors.

• The prospective bidders undertake due diligence of the PSU and hold discussions with the Advisor/ the Government/ the representatives of the PSU for any clarifications.

• Concurrently, the task of valuation of the PSU in undertaken in accordance with the standard national and international practices.

• Based on the reactions received from the prospective bidders, the Share Purchase Agreement (SPA) and ShareHolders Agreement (SHA) are prepared. After getting them vetted by the Ministry of Law, they are approved by the Government. Thereafter, they are sent to the prospective bidders for inviting the final binding bids.

• After examination, analysis and evaluation, the recommendations of the Inter Ministerial Group (IMG) are placed before the Core Group of Secretaries on Disinvestment (CGD), whose recommendations are placed before the Cabinet Committee on Disinvestment (CCD) for a final decision regarding selection of the strategic partner, signing of the Share Purchase Agreement and ShareHolders Agreement, and other related issues.

• In the disinvestment process mentioned above, Ministry of Disinvestment is assisted at each stage by an IMG, headed by Secretary (Disinvestment) and comprising officers from the Ministry of Finance, Department Of Public Enterprises, the Administrative Ministry/Department controlling the PSU, Department of Company Affairs, Department of Legal Affairs, CMD/Director (Finance) of the company being disinvested, and the Advisors.

After the transaction is completed, all papers and documents relating to it are turned over the CAG of India; the CAG prepares an evaluation for sending to Parliament and releasing to the public.

A detailed flow chart of the implementation process is given below: -

 

The Ministry of Disinvestment has laid down guidelines for qualification of merchant bankers etc. for appointment as Advisor and for bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment. The prospective Advisors and Bidders have to give undertaking at the stage of submission of EOI that they are eligible as per the criteria fixed by the said guidelines and that they have not been facing proceedings by any Regulatory Authority against any "Grave Offence" or "fraud" or have not been convicted by any Court of law. The detailed guidelines can be accessed at the Ministry’s Website www.divest.nic.in.

CHAPTER - VII

A website for the Ministry has been launched with the objective of making available all the information to the general public. It includes the recommendations of the Disinvestment Commission and other relevant information of public interest. The website is being strengthened further. The Ministry’s website address is www.divest.nic.in.

CHAPTER-VIII

With the help of funds, capability is proposed to be strengthened within the Ministry. Training programme, workshops, seminars etc. will be organized within the country. Exchange of ideas in disinvestment will be taken up with countries who are involved in this exercise the world over.

CHAPTER - IX

A Cell has been created in the Ministry to look into the labour related issues and will act as a focal point for the Public Sector Undertakings slated for disinvestment. Minister and the Secretary of MODI meet the representatives of the workers’ Unions of the PSUs where disinvestment process is underway and explains the policy of the Government in this regard and solicits their cooperation, whenever needed. Similarly, the administrative Ministries and the management of the companies discuss labour-related issues with the trade-union representatives and other leaders to clarify the Government’s position and allay misgivings, if any.

CHAPTER-X

i) Seminar on Valuation of Shares

The Ministry organized a seminar in collaboration with the SBI Capital Market on the subject of valuation of shares. The seminar evoked good response from Government Departments, PSUs and the merchant bankers. It was helpful in creating awareness amongst the participants and in dispelling many misconceptions in this regard.

ii) Conference on "Global Experiences in Privatisation"

The Ministry of Disinvestment in association with the Administrative Staff College of India, and with the Department for International Development, UK and the World Bank as co-sponsors, organised a Conference on "Global Experiences in Privatisation" at Hyderabad during the period from April 9 to 11, 2001. The Chief Minister of Andhra Pradesh delivered the opening address and the Minister of Disinvestment delivered the Keynote address in the conference. Lord Nigel Lawson, former Chancellor of Exchequer, United Kingdom, addressed the Conference along with other notable speakers. Senior level representatives of various Ministries/Departments of the Central and the State Governments and Senior level functionaries of Public Sector Enterprises attended the Conference.

iii) Documentary film on Disinvestment

A film titled "Turning Silver into Gold" depicting the post - privatisation scenario of Lagan Jute, Modern Foods & BALCO has been made and telecast through Doordarshan. The film has been widely disseminated and appreciated. It can be accessed through the website of MODI.

CHAPTER-XI

Hindi work:

The Ministry has a full-fledged Hindi Section for handling all statutory work, i.e. complying with the bilingual requirements of the Parliament pertaining to the Ministry, and all out efforts are on to comply with the provisions of section 3(37) of Official Language Act, 1963, in the Ministry.

CHAPTER - XII

Achievements so far

XII. 1 Disinvestment in Public Sector Undertakings Year-wise

The following table indicates the actual disinvestment from 1991-92 to 2001-2002, the methodologies adopted for such disinvestment and the extent of disinvestment is different CPSUs.

* Total number of companies in which disinvestment has taken place so far. #Provisional Figures [including from subsidiaries]. Figures also include Dividends/Dividend Tax/Transfer of surplus cash reserve etc, prior to disinvestment

1. Reyrolle Burn Ltd.

2. Bharat Brakes and Valves Ltd.

3. Scooters India ltd.

4. Bharat Pumps and Compressors Ltd.

5. Praga Tools Limited 

6. Bharat Leather Corporation.

7. National Industrial Development Corporation.

8. Hindustan Insecticides Limited.

         2.   Manganese Ore (India) Ltd. (MOIL),

         3.   Rail India Technical & Economic Services Ltd. (RITES), and

         4.   Projects & Equipment Corporation Ltd. (PEC).

Before the year 2000, the Government had primarily sold minority shares in public sector companies. The price realized through the sale of shares, even in blue chip companies like IOC, BPCL, HPCL, GAIL & VSNL was low as the following table indicating Price to Earning Ratios would indicate. On the other hand, the prices realized through strategic disinvestment have been very high.

2. During the period 1991-2000, the sale of minority share of public sector undertakings had led to an income of about 18,000 crore. Most of the shares during this period were picked-up by financial institutions. Unit trust of India was one of such institutions which had picked up the sizeable number of shares.

It is expected that UTI losses will reduce on account of strengthening of public sector share values recently.

3. The figures given in the preceding paragraphs would show that the policy announced by the Finance Minister in the Budget speech of 2000-2001 in favour of strategic sales of identified PSUs has paid dividend. To recall the Finance Minister had said: … "Government have recently established a new Department for Disinvestment to establish a systematic policy approach to disinvestment and privatization and to give a fresh impetus to this programme which will emphasize increasingly on strategic sales of identified PSUs." It can be said that the taxpayer has gained above Rs. 783.79 crore per year from the sale of a few undertakings. If this exercise moves forward, the gains to the tax-payer would be tremendous. The economy would gain as the public sector assets would yield much higher dividend to the economy than what they are yielding at present.

4. A fear is often expressed that the employees would lose if companies are privatised. Recent privatizations have shown that these fears are totally unfounded. of a total workforce of about 350 million in this country, the public sector employs only about 2 million. During the last ten years, without any privatization or strategic disinvestment, this work force has got reduced from 2.3 million to 1.7 million on account of economic pressures. Privatized companies, shown in the table above, have not retrenched a single person. Some of the companies are now in the process of restructuring and would accept some voluntary retirement applications. Some companies are giving VRS to the employees, at scales which are normally higher than the Government VRS. Shareholders Agreement with private companies normally have a provision that employees interest would be protected by ensuring VRS, which is higher or equal to the Government VRS, if there is a need for restructuring in the number of employees. As has been stated above, such exercises are done during the public sector regime also.

5. Very often additional recruitment also takes place in privatised companies and the wages are increased. To give an example, wages have been increased by an average of Rs. 1600 per employee in Modern Food Industries Limited. Within a month after privatization, the company had been referred to BIFR. At the time of privatization everyone knew that based on its past performance, Modern Food was fast approaching BIFR. Hindustan Levers are now taking measures to financially restructure the company and bring it out of BIFR, at their own expense. Had the Modern Food remained a Government Company, the tax payer would have paid for financial restructuring of the company perhaps repeated by another restructuring a couple of years later, again at tax payers expense, as is usual in the public sector. In BALCO, wages had not been increased after 1.4.1999, even though a revision was due. In spite of loss of about Rs. 200 crores due to the strike, an ex-gratia payment of Rs. 5,000/- was paid to all employees and a long term wage agreement for a period of five years entered into by the Management with the employees on 7.10.2001, which guaranteed benefit of 20% of basic pay to each employee, besides increase in a number of allowances. In case of PPL, the Strategic Partner has committed that the pending wage/pay revision would be implemented prospectively and that discussion regarding payment of arrears would be initiated immediately and modalities of payment of arrears finalised within 90 days.

6. The performance of a very large number of public industries is disappointing, often owing to reasons beyond the management’s control. Performance is particularly poor in public sector manufacturing industries. Some of the public industries have done extremely well, but these are in monopoly sectors like Petroleum, Power and Telecom, where prices are determined by Government on a cost plus basis. Once these monopolies go, public industries come under severe pressure and generally become loss making. SAIL is a classic example where the company has started making heavy losses after it has had to compete with private sector industries, after liberalization.

7. During the last ten years, the Tax payer has had to give about Rs. 80,000 crores directly or indirectly to the public sector, so that it could survive. During 1999-2000 alone, the CAGs report on CPSUs for 1999-2000 indicates that the tax payer has taken a huge burden in one year alone. These figures are shown below.

• During 1999-2000 the Government of India supported CPSUs by providing subsidy amounting to Rs. 11,999 crore.
• During 1999-2000 loans and interest to the extent of Rs. 6,062 crore were waived by Government of India for CPSUs.
• During 1999-2000 guarantees to the extent of Rs. 5,079 crore were provided to the CPSUs for payment of their loans.

Total liability : Rs. 23,140 crore

8. Signing of WTO has increased the pace of globalization and unless industries are highly competitive they will not survive. There is no reason why taxpayer should take the burden of running inefficient industries. The Ministry of Disinvestment is trying to privatize a number of industries.

CHAPTER- XV

51% of Government held equity in Bharat Aluminium Company Ltd. (BALCO) was disinvested on 2^nd March, 2001 in favour Sterlite Industries (India) Ltd. for Rs. 551.50 crore. In protest, the workers went on a 67-day strike. Three writ petitions-two in Delhi high Court and one in Chhatisgarh High Court were filed against disinvestment in BALCO in February, 2001. Since the issues involved in all three cases were similar, a transfer petition was filed by the Ministry of Disinvestment in the Supreme Court. The Court considered the petition, stayed the proceedings in the High Courts and transferred all the three petitions for hearing in the Supreme Court. The case was heard by a three judge bench in the Supreme Court. The Supreme Court in its unanimous judgement delivered on 10^th December, 2001 has validated disinvestment by the Government in BALCO. The landmark judgement also defined, amongst others, the parameters of judicial review in Government’s economic policy matters. The Hon’ble Supreme Court, in its order dated 10^th December, 2001, while validating BALCO-disinvestment and dismissing the petitions, remarked, "Thus, apart from the fact that the policy of disinvestment cannot be questioned as such, the facts herein show that fair, just and equitable procedure has been followed in carrying out this disinvestment."

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