NEW DELHI, February 5: The union cabinet has decided to hand over all incomplete public sector projects, in which 30 per cent of the total allocated funds have already been spent and 80 per cent of the gestation period is over, to the private or the joint sector. The unviable projects would be axed.The secretariat, last week wrote to all government departments of the cabinet's decision. An empowered committee, headed by the member secretary of the Planning Commission, has been set up to review all such projects. Secretaries of the departments of expenditure and programme implementation will be its other members.
Secretary of the respective administrative ministry, to which a public sector project taken up for scrutiny belongs, will also be co-opted as a committee member.
The modalities of hawking these projects, by way of full or partial ownership, will be worked out later. The cabinet secretariat has ordered all ministries, in consultation with the programme implementation department, to prepare alist of such projects under the new time and cost overrun parameters. The member-secretary Planning Commission will then convene a meeting of the committee and recommend the units for privatisation or for co-option of private equity to the cabinet.
The new yardstick for privatisation will, however, allow the committee to take up other incomplete public projects which do not fit into the norms laid down by the cabinet.
The cabinet secretariat has said that an unfinished project, which has become unviable due to change in market conditions (domestic or global) or in technology or financial parameters, should also be considered by the committee for privatisation.
Projects, stuck due to delays in land acquisition and environment clearances should also be given a hard look.
The new norms modifies the earlier decision of the Narasimha Rao government for axing or privatising public sector projects.
The law then allowed only those PSU projects, with a capital expenditure of only 5 per cent of the totalproject cost and which had already completed 60 per cent of the gestation period, to be reviewed.
Insight
A sense of deja vu
This is not the first time that a proposal to hawk public sector projects facing time and cost overruns has been made. But the concerned authorities have not been able to go beyond identifying the projects. The modalities of sale and transfer have yet to be worked out.
This is a tricky issue because inflated costs make the languishing projects unsaleable.
The assumption that unfinished projects in the core sector -- coal, railways and power -- which is the domain of the public sector, will be lapped up by the private sector is simplistic.
Coal and railway projects are not the private sector's cup of tea. Land ownership is a grey area. Besides, at the present time, the big corporates are pre-occupied with consolidating their interest in companies they manage.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
