The state planning board deputy chairman DM Nanjundappa told The Financial Express that the Government is considering the proposal which evolves modalities for disinvestment. Last month the state planning board had tabled the proposal before Chief Minister JH Patel.

He said the state must expedite the process of the privatisation of the sick PSEs in Karnataka.

"A firm policy, which is expected to be framed along with the divestment fund, will help finalising the prospective suitors," he said.

The government should be always open to privatisation and at the same time it should take care the sentiments of the workforce. The money from the proposed divestment of PSEs can be parked as a fund which should be raised within a stipulated timeframe.

"The fund should be set up in a way that facilitates the rehabilitation purposes ofemployees and for further strengthening of the other state-run firms. It should not be utilised for any other developmental activities," Nanjudappa added.

In Karnataka, the disinvestment processes are being monitored by individual merchant bankers. The role of merchant bankers, which have its own customers list and policies, can be scrapped and a committee for the purpose should be appointed shortly, he pointed out.

The disinvestment policy should include details about the equity structure of the company and the participation of the prospective buyers. The prime priority should be given to the rehabilitation proposal of the workers' union.

State-run companies like NGEF Ltd, Mysore Acetate and Chemicals Company Ltd, Mysore Lamps Ltd, Mysore Electrical and Industries Ltd, and the Karnataka Telecom Ltd are still in the disinvestment list. The poor market conditions coupled with the lack of commitment among the employees have proved to be the factors that affect the divestment process.

Industry analystssaid the Karnataka Government is appeared to have shown some reservations towards companies like Hutti Gold Mines Ltd (HGML), Mysore Minerals Ltd (MML), Karnataka Soaps and Detergents Ltd (KS&DL) and Mysore Paper Mills Ltd (MPM), which never had found a place in the disinvestment list.

The changing political scenario in Karnataka has also hampered the privatisation move to a certain extent. It is learnt that the Janata Dal government, which is facing the state assembly election in November, is not willing to hurt the workforce of the ailing PSEs.

Interestingly, many state public sector enterprises are places for filling the politicians and the relatives of politicians as employees. For instance, companies like MML and NGEF have chairmen from the Janata Dal, in addition to the managing directors from the IAS cadre.