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Disinvestment policy: Government should encourage retail investors, says Yashwant Sinha

NEW DELHI: In a strong indictment of divestment policy, Parliament's standing committee on finance said the government was "selling family's silver to pay grocery bills" even as it called for greater participation for retail investors.

"The government should look for market penetration and encourage 
retail investors," the panel headed by former finance minister Yashwant Sinha noted in its report on demand for grants of finance ministry departments.

"The committee regret to observe that in the absence of concrete disinvestment policy and lack of consistency in utilization of disinvestment proceeds, the disinvestment proceeds of Central Public Sector Enterprise (CPSEs) over the years being treated as 'selling family silver to pay grocery bills' the committee said.

It said disinvestment proceeds should not be used for revenue expenditure is not justified.

"When the government dispose off one asset, proceeds there from should be only used for fresh asset creation" the committee said adding that its recommendations were ignored.

In the current year, the government proposes to use the Rs 40,000 crore disinvestment proceeds to capitalize state run banks and provide budgetary support to the Railways, and idea that the panel does not endorse.

Special cell to address NPAs

The committee expressed its dissatisfaction over the rising bad loans in state run banks and said that rising NPAs have weakened the ability of PSBs to expand credit to deserving sectors.

It directed the government to set up a special NPA Management Cell to review and monitor the pace of recovery.

The committee also urged the government to expedite the process of setting up a holding company for PSBs and ensure that capital infusion done by government is only utilised for the purpose of credit growth and not for re-structuring NPAs.

Black money probe

The standing committee asked the finance ministry to expeditiously complete the probe into the names revealed by 
HSBC on unaccounted money stashed abroad. It asked for a report within one month. It suggested that economic intelligence should be better developed and bipartite agreements concluded with regard to plugging generation of unaccounted money through tax havens.

The committee also stressed on widening the tax base and observed that out of 11 crore PAN card holders only 3.5 crore entities have filed 
income tax returns.

Fresh legislation for UIDAI

The committee said the government should address the various shortcomings of the UID scheme and bring a fresh legislation in the next session.

"Although 15 months have lapsed after presentation of its report on 
UIDAI, the government has not yet brought any fresh legislation before the Parliament.