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Finance Minister Speech : State Fiscal Reforms
Finance
Minister's Speech - Part A (contd...)
State Fiscal Reforms
86. Along with fiscal consolidation at the Centre, it will be
our endeavour to work jointly with the States to reform their finances.
Pursuant to the recommendations of the Eleventh Finance Commission, an
Incentive Fund of Rs 10,607 crore has been earmarked for the next 5
years to encourage States to implement monitorable fiscal reforms. These
reforms will essentially be the States’ own programmes and
considerable flexibility has been provided for individual States to
design their programmes. In the fiscal year 2001-02, I have provided an
amount of Rs 4243 crore towards this Incentive Fund.
Public Sector Restructuring and Privatization
87. Our public sector has expanded in almost every area of
economic activity. In many ways, it has served the nation well;
capability has been developed all round and a strong industrial base
built up. These enterprises must now be strengthened to compete and
prosper in the new environment. Last year I had defined government’s
policy in this regard clearly.
88. Financial and business restructuring plans of a number of
PSUs including SAIL and HMT have been approved. Since 1998 financial
restructuring support to viable and potentially viable PSUs amounting to
more than Rs 13,000 crore has been provided to 23 PSUs. Government has
also decided to close down 8 non-viable PSUs during the current year. A
package of measures for revival and closure of the various mills of
National Textiles Corporation has also been approved.
89. The procedure for privatization of public sector enterprises
has now been considerably streamlined. The Department of Disinvestment
has been set up to accelerate the privatization process. To maximise
returns to government, our approach has shifted from the disinvestment
of small lots of shares to strategic sales of blocks of shares to
strategic investors. The Government has already approved privatization
of 27 companies in which the process of disinvestment is expected to be
completed during the course of the year. These companies include among
others VSNL, Air India, and Maruti Udyog Limited.
90. Given the advanced stage of the process of disinvestment in
many of these companies, I am emboldened to take credit for a receipt of
Rs 12000 crore from disinvestment during the next year. An amount of Rs
7000 crore out of this will be used for providing restructuring
assistance to PSUs, safety net to workers and reduction of debt burden.
A sum of Rs 5000 crore will be used to provide additional budgetary
support for the Plan primarily in the social and infrastructure sectors.
This additional allocation for the plan will be contingent upon
realization of the anticipated receipts. In consultation with Planning
Commission I shall come up with sectoral allocation proposals during the
course of the year.
