Speaking at the Indian Chamber of Commerce, Ramakrishna said it was unfortunate that the government has not yet heeded to the commission's recommendation made in February 1997, that the proceeds from disinvestment be kept in a `Disinvestment Fund' and used for certain "creative" purposes only.

"How long can you sell assets created by taxpayers' money to finance current expenditure of the government?" he queried. The disinvestment programme of the government did not also allow representation of new shareholders on the boards of the respective companies and showed that there was no corporate democracy in these undertakings, Ramakrishna noted. The disinvestment programme would attract public support only if the proceeds went into developmental activitieswith tangible spin-off benefits. Shareholder value could be increased in these undertakings only by restructuring and an effective VRS programme, he added.

Ramakrishna said the capital market was, at present, moved to a large extent due to foreign institutional investors opting for contrarian style of investing. It was in everybody's interest, he pointed out, to ensure that participation was broad-based with the domestic financial institutions and retail investors playing a positive role.

"The problem with our markets is that there is a dearth of good scrips. Money is no problem. Funds get diverted to banks because there are limited investment avenues in the capital market," he said.

The solution, Ramakrishna suggested, was to encourage genuine investments and avoid inflows of excessive hot money. Ramakrishna felt that a postal ballot system of voting in companies which have a large shareholder base (above 10-15 lakh) should be made mandatory by amending the Companies Act.