According to merchant bankers close to the industry ministry, since disinvestment was anyway on the government agenda, it has been proposed that the PSUs can hive off their expansion programmes under separate vehicles, where the public or financial institutions can be invited to hold majority equity, while the original public sector company continues to hold a minority stake.

Public sector managements were anyway amenable to the idea, and several bluechip public sector corporates had been thinking in terms of joint ventures and widely held associate companies. "But it is expected that if the merchant bankers are able to create avalid model for this form of investment, approvals for such strategies will come in much faster from the government than they have in the past," said the sources.

This will also provide the capital market with opportunities to hold equity in good projects, and provide international joint venture partners, including American and Japanese companies, which may otherwise find it difficult to tie up with companies directly held by the Indian government, can also throw in their lot through joint ventures.

It has been pointed out that this way, the government's control on the original public sector companies, of course, remain intact.

"What is interesting is that restructuring of expansion projects to meet the exigencies of the post-sanctions period has currently taken over as the lead item on the agenda of the ministry," said sources close to the industry ministry, "merchant bankers are at least putting in as much effort in advising public sector companies to recast their expansion projects as in advisingthem on restructuring themselves organically, which was originally the mandate."

A large number of public sector companies were considering expansion projects at the point when the sanctions were imposed. Bluechip corporates such as Videsh Sanchar Nigam Ltd, Indian Petrochemicals Ltd, and the oil majors were at the vanguard of proposed expansion projects. Videsh Sanchar Nigam Ltd had anyway proposed going ahead with growth through jointventures.

IPCL was also believed to be drawing up plans to set up expansion projects, especially in the wake of the "navaratna" status which the industry ministry under the former United Front government accorded it, along with a number of other public sector undertakings.