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Economy Mar 28, 2012

Mr Jaiswal, you are right: govt is a ‘blood-sucking mosquito’

By Rajanya Bose

Mr Jaiswal, you were right when you said some government departments sucked blood like mosquitoes from the business community.

While the coal minister retracted his statement later and pointed out that it was not intended for the finance ministry, Firstpost believes there are enough instances to justify that statement.

In the latest example of such 'blood-sucking' activity, the department of public enterprises (DPE) has directed all PSUs to consider buying back government shares to help meet the flailing divestment programme of the government.

Mr Jaiswal, you were right when you said some government departments sucked blood like mosquitoes from the business community.

The Union Budget has set the divestment target at Rs 30,000 crore for the financial year ending March 2013. In the current financial year, it forecast for a starry target of Rs 40,000 crore - and racked up a dull Rs 15,000 crore. This time, the department is being proactive from the beginning to meet the stipulated target for divestment.

In a note to secretaries of all administrative ministries, the DPE said central PSUs were not actively considering the option of buy back, reports Indian Express. The surprising thing is, this comes right after finance ministry had clarified it will not push any PSU to forcefully buy back government shares, the report adds.

That's not all the government has planned. In a bit to meet its new divesment target, the government is also considering divesting subsidiaries of PSUs that are profitable. In fact, talks have begun already, reports Economic Times.

If this subsidiary buyback plan goes through, it will be against minority shareholders as the cash these companies could use to invest for growth and improving shareholder value, will be used for the benefit of the majority shareholder (government).

So yes, Mr Jaiswal is right about government being a mosquito that is trying to suck out everything it can from profitable state-run enterprises. Although, we have to admit, we're a bit nonplussed at his exasperation. After all, wasn't he the one who once said that Coal India could even hand over Rs 25,000 crore for the Food Security Bill. So, why is he so upset now?

by Rajanya Bose

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