The buyback, according to sources, would be funded by the reserves of the companies, and if need be, with help from financial institutions. The ministry has also initiated a dialogue with the financial institutions to buy government shareholding in the PSUs at a discounted price.

In both the cases, the exchequer would be the beneficiary at the cost of public sector undertakings. The other option being considered by the ministry is to franchise identified telecom circles belonging to the department of telecom (DoT) to the Mahanagar Telephone Nigam Ltd (MTNL).

The six public sector undertakings being considered for buyback of shares include Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), Gas Authority of India Ltd (Gail), National Aluminium Company (Nalco), MTNL andVidesh Sanchar Nigam (VSNL).

As part of the disinvestment process, the government may not be able to mop up more than Rs 600 crore as against the target of Rs 5,000 crore. So far, the government has been able to raise only Rs 225 crore by disinvesting shares in Container Corporation of India (Concor). The other three PSUs identified in the budget for disinvestment are VSNL, IOC and Gail.

With only three months left for the current fiscal to end, it is unlikely that the government would be able to force all the three PSUs to hit the domestic or international markets. The government will be following the common book-building route, as was done in the case of Concor, for disinvestment of shares in these companies.

Also, the much talked about strategic sale of the public sector units is unlikely to take place during the current year. Although the government had appointed merchant bankers to suggest modalities for strategic sales, there report is still awaited. In some cases, only announcements have beenmade and the merchant bankers are still waiting for formal communications.

On the other hand, it would be easy for the government to throttle the public sector undertakings and financial institutions to cough up sums needed for balancing the budget.

Some of these identified companies have a very good reserves position. For instance, IOC has free reserves to the tune of Rs 10,151 crore, ONGC Rs 18,637 crore and Gail Rs 2,292 crore.

It is expected that the buyback coupled with disinvestment through institutional purchases of government shares in PSUs might yield Rs 10,000 crore to the exchequer in the current fiscal.

The money, though, would be unable to cover up the failure of the government on the revenue front. The minister had, in his budget speech, promised to bring down the fiscal deficit from 6.1 per cent to 5.6 per cent at the end of current fiscal.

`Fiscal deficit may spurt'

The fiscal deficit in 1998-99 could be higher than 6.3 per cent of the GDP if the revenue deficit exceeds Rs20,000 crore as anticipated by a section of the population, finance minister Yashwant Sinha said in Calcutta on Wednesday.