Legislation on privatisation mooted

By Our Special Correspondent

HYDERABAD, JAN. 31. The State Government intends to bring in special legislation to expedite the process of privatising the loss-making State-Level Public Enterprises (SLPEs), which include cooperatives.

A privatisation board, consisting of the Minister for Finance, Minister for Industries and three or four outside experts, is also proposed to be created to take decisions on privatisation, thereby avoiding the need to refer these issues to the State Cabinet.

The proposed law and the privatisation board were elaborated in a strategy paper on `Public sector reforms and privatisation in AP,' released by the Minister for Major Industries, Mr. K. Vidyadhara Rao, on Wednesday.

The privatisation law for creating the institutional arrangement to facilitate privatisation would define the role of the Government, implementation process, the privatisation board and its power and methods to be adopted. The law proposes to bar lower courts from entertaining applications regarding the privatisation process while writ jurisdiction of the High Court would always be there.

The Minister explained that the disposal of assets of many closed units was getting delayed due to stay from lower courts. The assets had been lying idle for three to four years. Therefore, it was proposed to exclude the privatisation process from the jurisdiction of lower courts.

Mr. Vidyadhara Rao said the status paper would be posed for public debate based on which the privatisation policy would be evolved. He was non-committal on the introduction of the privatisation bill in the coming budget session of the State Assembly. He also parried questions relating to the impact of privatising PSUs on reservations in jobs for SCs, STs and BCs.

The Minister said there were 40 SLPEs with a capital investment of Rs. 4,444 crores and accumulated losses of Rs. 1,894 crores. These enterprises employed approximately 3.50 lakh persons. The gross debt by the Government was of the order of Rs. 4,144 crores and external debt of Rs. 14,742 crores guaranteed by the Government.

There were about 60 cooperative societies in which the Government was a dominant shareholder. They employed 29,000 persons and the capital investment in these societies was over Rs.1,000 crores while the losses had gone beyond Rs.250 crores. The cooperatives include 18 sugar mills and 12 spinning mills.

The gross equity investment by the State Government formed 83 per cent of the equity capital of the public sector enterprises while the balance was being raised from other sources, the bulk of which again coming from the Central Government or financial institutions. There was negligible private investment in these enterprises. They had recorded profit only for two years in the entire decade. Profits reported by some enterprises are questionable on the account of qualifying notes made in the audited accounts.

The Minister said the Subrahmanyam committee examined 30 SLPEs and finalised recommendations in respect of 26 enterprises. The State Cabinet, which examined these recommendations, decided to continue 12 undertakings, wind up five and downsize or privatise nine enterprises.

Mr. Vidyadhara Rao said privatisation policy was taken up as part of a process to reduce the involvement of the State in the economic activities and concentrate its efforts on good governance and provision of social services such as education and healthcare.

The World Bank sanctioned about US $ 26 millions including ten per cent contingency to finance 70 per cent of the VRS (Voluntary Retirement from Service) amount payable to the employees affected by phase I action plan. The remaining 30 per cent of the VRS amount and terminal benefits would have to be borne by the Government. The programme restructuring, downsizing, privatisation or closure of 19 small and medium-sized public and cooperative enterprises was now under implementation in phases. It is proposed to initiate work on phase two based on the strategy outlined in the paper, the Minister explained.

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