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Panel suggests setting up disinvestment fund

The Parliamentary Standing Committee on Industry has recommended that a divestment fund be set up for industrial development.

The proceeds of divestment could be deposited in this fund, the Committee said in its report presented in Parliament on Thursday.

It suggested central implementation. The government could examine the feasibility of handing this job over to the Disinvestment Commission, it said.

Before selling its equity share in public sector units, the government should take the advice of capital market professionals about the real market worth of equities, the Committee said.

It questioned the concept of forming 'holding companies' like the Bharat Yantra Nigam and Bharat Bhari Udyog Nigam Ltd. Such holding companies have hardly yielded anything so far.

"The clubbing of sick units with profit-making units has affected the profitability of the latter," the report said.

The Committee regretted that the Foreign Investment Promotion Board does not try to find out the situation after approving a proposal. The investor is left to fend for himself as nobody is looking into his hardships. This, it felt, could be the reason for the wide gap between the approval of proposals and the actual flow of foreign direct investment.

It suggested that the industry ministry should conduct a national survey to identify industrially backward areas and set up growth centres in consultation with state governments. It hoped that necessary budgetary support would be given to implement this proposal.

Though the Tariff Commission was announced in 1997, it is yet to be functional. The Committee wanted to know as to why this was set up in haste without even initial spadework.

The Committee suggested the merger of the department of industrial development with the department of industrial policy and promotion.

The Committee favoured the rolling back of investment limit for small scale units to Rs 10 million.

UNI