ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Cutting Corners WHILE the proposal to disinvest up to 20 per cent of government equity in selected public sector units was widely irtterpreted as a first step towards the privatisation of public enterprises, quite a few observers were quick to note that it was "essentially an accountancy game" to reduce the fiscal deficit and bring it as close as possible to the target of 6.5 per cent committed in the government's negotiations with the IMF. In fact, fear was expressed in some quarters, and not without justification, that this measure might as well pre-empt "institutional funds so as to provide budgetary support" and might therefore "affect both stock market prices and investment by the financial institutions and mutual funds in new projects and share issues". Now that it has been disclosed that contributions to the various approved mutual fund schemes during 1990-91 have fallen far short of the level they were expected to reach, it is possible that the financial institutions will have to be depended upon to a much greater extent than was originally expected if the target of Rs 2,500 crore set in the Centre's interim budget for the disinvestment of government equity in public sector units in 1993-92 is to be achieved. So the fear of diversion of funds in support of the budget may prove to be quite well-founded.

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