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

The six public sector undertakings being considered for buy back of shares include Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), Gas Authority of IndiaLimited (GAIL), National Aluminium Company (Nalco), Mahanagar Telephone Nigam and Videsh Sanchar Nigam (VSNL).

As part of disinvestment process, 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 the 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 fiscal to end, it is unlikely that the government would be able to force all the three PSUs to hit the domestic or international market. The government will be following the common book building route, as was done in case of Concor, for disinvestment of shares in these companies.

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

On the other hand it would be easy for the government to throttle the public sector undertakings and the financial institutions to cough up sums needed for balancing the budget. Some of these identified companies have very good reserve position. For instance IOC has free reserves to the tune of Rs 10,151 crore, ONGC Rs 18,637 crore and GAIL Rs 2292 crore.

It is expected that the buy back coupled with disinvestment through financial institution purchases of the government shares in PSUs might yield Rs 10,000 to the exchequer in the current financial year. The money though would not be able to cover up the failures on the revenue front and fiscal profligacy of the BJP government, would help the finance minister to keep fiscal deficit below 6 per cent of the GDP. The minister, in his budget speech, had promised to bring down the fiscal deficit from 6.1 per cent to 5.6 per centat the end of current financial year.