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Audit Reports on Disinvestment

The delayed audit reports on disinvestment of public sector undertakings during 1999-2003, submitted by the comptroller and auditor general of India, raise several key issues relating to the modus operandi of a strategic sale and several technical and methodological issues.


Audit Reportson Disinvestment

The delayed audit reports on disinvestment of public sector undertakings during 1999-2003, submitted by the comptroller and auditor general of India, raise several key issues relating to the modus operandi of a strategic sale and several technical

and methodological issues.


he report of the comptroller and auditor general (CAG) on disinvestment of public sector undertakings (PSUs), placed in Parliament in last week of August 2006 has raised a controversy and accusations have been made that the earlier disinvestment process had been mishandled. The report covers the period 1999-2003, when the NDA government headed by Atal Behari Vajpayee was in power. The present UPA government has for all practical purposes abandoned the policy of privatisation. Does the report, which comments on the transactions of several years ago, serve any useful purpose? Why could not the report be produced during the NDA regime when the privatisation programme was in full swing, so that the government of the day could take advantage of CAG’s wisdom and advice and redesign its policy?

The CAG is a high constitutional authority and works on behalf of Parliament, with a view to hold the executive to account. His/her function is to examine, whether the policy of the government has been carried on with due regard to wisdom, faithfulness and economy and value for money has been secured and report to Parliament. What have been CAG’s observations on the government’s privatisation policy which was initiated in 1991, as an integral part of the new liberalised economic policy.

During the last 15 years the government has carried on large-scale disinvestment and privatisation and a sum of Rs 49,214 crore has been realised. The table in the Annexure gives details of disinvestments made from 1991-92 to 2005-06, the money realised each year and its methodology in brief. The disinvestment exercise can be divided into four phases: (1) First phase – during the Narasimha Rao government – 1991-92 to 1995-96. Only minority share holdings of individual companies were sold, mainly to financial institutions, adopting an auction route, with a high monetary threshold limit for the buyers. (2) Second phase – Janata Dal regime – 1996-97 to 1998-99. Due to widespread criticism of the disinvestment process and the government’s ambivalence, there was practically no disinvestment. The government garnered some money to meet budgetary deficit by floating global depository receipts (GDRs) in international market, and cross purchase of shares by oil companies. (3) Third phase – NDA regime – 2000 to April 2004. The privatisation programme in a real sense can be said to have commenced from 2000, when the government started transferring majority control of several companies to private parties, mostly through a strategic sale route. (4) Fourth phase – The UPA government – June 2004 onwards, when privatisation programme has virtually come to a stop. Nevertheless, disinvestment very much remains a policy option. The finance minister announced in his budget speech in July 2004, “Disinvestment and privatisation are useful economic tools. We will selectively employ these tools consistent with the declared policy.” A sum of Rs 4,000 from the PSU disinvestment was budgeted for 2004-05 and Rs 2,765 crore realised, mainly through offloading of shares of the National Thermal Power Corporation (NTPC).

First Report on Privatisation

During the last 15 years, the CAG has produced only three reports on disinvestment. The CAG’s1 first report was brought out in 1993, covering the first round of disinvestment during 1991-92 in which Rs 3,038 crore was realised. The report severely criticised the manner in which the disinvestment exercise was done by clubbing shares of different enterprises and arbitrarily lowering the reserve price, resulting in loss to exchequer. The report evoked widespread public response and criticism. The Public Accounts Committee,2 which examined the report passed severe strictures against the government and called for a probe to identify the persons responsible for mismanaging the disinvestment process. As a result, the government proceeded very cautiously in subsequent rounds, which had the effect of slowing down the entire disinvestment exercise.

Second Report on Privatisation

The CAG’s report3 on sale of two hotels, the Hotel Corporation of India’s (HCI), Juhu Centaur and Airport Centaur was submitted to Parliament in mid-2005. The report pointed out lapses in the sale transaction. The sale was finalised on the basis of a single bid and the methodology adopted for valuation had the effect of lowering the reserve price. In an earlier audit report4 on Airport Authority of India (AAI) submitted to Parliament in 2004, the CAG had pointed out that the AAI reduced the lease rent as well as turnover levy before the sale transaction, which resulted in substantial financial benefit to the new owner. The standing committee of Parliament5 on tourism had earlier (March 2003) adversely commented on the Centaur transaction and found fault with the original buyer selling the property to another party within few months of its purchase at a huge profit. A call attention motion6 was moved in the Rajya Sabha, soon after the UPA government came to power. The finance minister P Chidambaram expressed reservation over the manner in which the deal was carried and said that the matter will be looked into, after the CAG submits a report. The report of the CAG contained no new revelations, which were not already in

Economic and Political Weekly December 16, 2006

public domain, but it authenticated a widespread impression that the deal was not in the best interest of government.

Third Report – Privatisation of Nine PSUs

The CAG’s third and most recent report,7 covers nine PSUs where majority shareholding was passed on to private parties through the strategic sale route. They are: (1) Modern Food Industries (MFIL); (2) Bharat Aluminium Company (BALCO); (3) Hindustan Teleprinters (HTL); (4) Computer Maintenance Corporation (CMC); (5) Indo-Burma Petroleum Company (IBP); (6) Videsh Sanchar Nigam (VSNL); (7) Paradeep Phosphates (PPL);

  • (8) Hindustan Zinc (HZL); and (9) Indian Petrochemicals Corporation (IPCL). It may be noted that IBP’s majority shareholding has been taken over by the Indian Oil Corporation (IOC), a public sector company and therefore, it cannot be said to be a real case of privatisation, where the ownership has passed on to a private hand.
  • The CAG’s main findings are summarised below:
  • (a) Valuation: The valuation of the company is a central issue in the privatisation process. The global advisers (GA) were appointed to advise the government regarding valuation of each PSU. The main methodologies adopted were discounted cash flow (DCF), asset valuation and balance sheet valuation methods. The DCF methodology was the predominant valuation technique used for most companies, but conservative assumptions were made while computing it and in some cases, even without making future projections of business, which is a prerequisite. In several cases where valuation was done under the asset valuation methodology, core assets like leasehold land, housing, township and plant and machinery and certain other properties were not valued or ignored. This resulted in an undervaluation of PSUs, consequently fixing of lower reserve price.
  • (b) Insufficient competition: Competition was not generated to secure best price as at the final stage, financial bids were submitted by only one party in case of MFIL, CMC, PPL and two parties in case of BALCO, HTL, VSNL, HZL, while in case of IPCL, Expression of Interest by three international bidders was rejected without assigning any reason.
  • (c) Shareholders’ agreement: It was entered on terms adverse to government, as
  • the strategic partner has been given right to purchase balance equity of privatised PSUs, in what is known as, call and put option. In case of HZL, the strategic partner used this option to purchase 79.9 million shares at Rs 40.51 when the market price was hovering around Rs 119.10, giving it a windfall profit. A similar provision exists in the agreement of sale of BALCO, whose new management has exercised the option to purchase remaining shares held by the government in March 2004.

    (d) Post-closing adjustment clause: In the sale of four unlisted companies, MFIL, BALCO, HTL and PPL, an open-ended agreement has been entered, under which the government is required to pay the strategic partner any claims resulting from depletion of current assets of the company, between the date of the last audited balance sheet and the date of purchase of the shares. All the four companies have filed heavy claims against the government and in case of MFIL, the government has already paid Rs 12.64 crore to new management. Except BALCO, the other three companies stand refereed to the Board of Industrial and Financial Reconstructions (BIFR) after the disinvestment.

    Issues Arising Out of CAG’s Report

    The CAG’s report raises several key issues relating to the modus operandi of the strategic sale. While “right valuation” is the key to securing best financial terms, valuation of a “going company” raises several technical and methodological issues, where experts have widely divergent opinions. It is therefore desirable that in future sales transactions, after Global Advisers have done the valuation and the empowered committee of department of disinvestment has approved it, the CAG be asked to certify the same. This will help fixing not only the “right floor price”, but prevent any controversy regarding any “wrongdoing”. However, a more important issue is the generation of adequate competition and securing bids from large number of parties. In an era of globalisation, when the government is encouraging foreign direct investment, it is desirable to secure participation of multinational companies, as not many Indian companies have the financial sinews and technical capability to go for a strategic partnership. (It may be noted the final bid price was more than the reserved price fixed by the government, in seven PSUs mentioned in the CAG’s report, and only in one case, PPL, a loss-making company, was the final price below the reserved price. The real problem was lack of competition, as at the final stage of the bidding process, in most cases, there was only one serious party.)

    The particular clause in the shareholders’ agreement, under which the strategic partners could buy the residual government holding at a price, whether throughput or call option, seems to be totally unjustified. After all, these PSUs were privatised, so that the private sector companies could run them profitably and increase shareholders’ value. Therefore, the government should have kept with itself the option of disposing of their shares through the stock exchange. The controversy surrounding Sterlite,8 which had acquired BALCO, and wants to buy the government’s residual shareholding at a predetermined price, proves the point. Sterlite has exercised its call option and remitted a sum of Rs 1,098 crore by cheque to the government, based on some kind of ad hoc valuation of shares. The market value of the share is several times higher. This has put the government in a bind and it does not know how to wriggle out of the agreement. The ministry of law is of the opinion that the agreement itself was contrary to the provisions of the company law and therefore void.

    The post-closing adjustment clause, under which the government is required to pay for depletion in the asset value of the company, is preposterous and unheard of in the world of contract making. It is no wonder that in the case of PPL, while the government realised Rs 151.70 crore through the sale, the buyers have lodged a claim of Rs 151.55 crore under this clause.

    There is little doubt that there have been some serious lapses in the sale of some of these PSUs. However, if the CAG had brought out an audit report on individual PSUs, immediately after they were privatised, it may have helped government in taking corrective action in a subsequent round of strategic sale, which was spread over a period of four years. The parliamentary debates relating to BALCO, the first major profit-making PSU which was privatised, highlight the point.

    BALCO Privatisation

    The privatisation of BALCO was a subject of bitter controversy and an acrimonious debate took place in Parliament. The Rajya Sabha debated the issue on February 27, 2001 and the Lok Sabha on

    Economic and Political Weekly December 16, 2006 March 1, 2001 and an opposition-sponsored motion, that “this House disproves the proposed disinvestments of BALCO”, was defeated. The debate in Parliament was largely on ideological grounds. On a writ petition, by the BALCO Employee’s Union, the Supreme Court9 held (December 2001) that the disinvestment is not invalid and observed, “Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any provision of the Constitution. In other words, it is not for the courts to consider the relative merits of different economic policies and consider whether a wiser or better course can be evolved.” The court further observed, “The offer of highest bidder has been accepted. This was more than the reserve price which has been arrived at by a method which is well-recognised and, therefore, we have not examined the details of the matter of arriving at the valuation figure. Moreover, the valuation is a matter of fact and the court will not interfere unless the methodology adopted is arbitrary.”

    During discussions in Parliament, the minister for disinvestments, Arun Shourie observed that the deal was transparent and that all papers would be given to CAG for examination and for submitting a report. In the period March 2001 and December 2003, five starred and 15 unstarred questions were fielded in the Rajya Sabha and 11 unstarred questions in the Lok Sabha on BALCO. In reply to a question by Prem Chandra Gupta10 in August 2001, regarding transparency in the sale, the minister of disinvestment reiterated, “After the transaction is completed, all papers and documents relating to it are turned over to the Comptroller and Auditor General of India (CAG) to prepare an evaluation for sending to Parliament and releasing to the public”. In April 2002, in response to a starred question by Balkavi Bairagi,11 the minister for disinvestment informed the House that the CAG had made certain observations in its Draft Inspection Report, and the government has sent a reply thereto and “CAG has yet to furnish its final report”, and “no time period for laying the CAG report on the table of the House can be indicated”. In a subsequent question by Gaya Singh and J Chithranjan12 in November 2002, the Rajya Sabha was informed that the CAG had not yet furnished final report on disinvestment.

    Why could not CAG submit a comprehensive report on BALCO privatisation by the mid-2002, when an assurance regarding its appraising the deal was given to Parliament several times and the government had furnished its response to draft a report issued by him. Why was the report bunched with other privatisation transactions and submitted after a lapse of five years from the time of finalisation of deal? Was there a political motive behind the move? As privatisation of BALCO was an explosive political issue, could it be that CAG withheld the report, so that the government in power at that time (NDA) may not feel “annoyed and displeased”. Was a similar motive of “pleasing” the government in power guided the CAG now (August 2006) in submitting a report on nine PSUs disinvested during NDA regime. The present UPA government particularly its left allies, are against the policy of privatisation, and would be “pleased” if the policies of the previous NDA government are faulted and would like to obtain political mileage. The CAG must come out with an explanation for delay in submitting its report on BALCO and failing to fulfil its constitutional responsibility to Parliament.

    The internal organisational structure of the office of CAG is not geared to bring out timely high quality reports. The office of the CAG has a full-fledged commercial audit wing responsible for the audit of all the central PSUs, headed by the deputy comptroller and auditor general-cumchairman, audit board, an officer of the rank of a secretary to government. She/he has under her/him more than a dozen senior officers of principal director (joint secretary) rank, stationed all over India, along with a staff of few hundred professionally qualified and trained audit officers. They understand the intricacies of the working of a commercial organisation, the nuances of a complex valuation exercise and have the expertise to deal with PSUs sales transactions. But curiously the commercial audit wing has not been entrusted with the responsibility to audit privatisation. The task is given to a relatively junior functionary, the principal director of audit, economic ministries, on the ground that the office is responsible for audit of economic ministries of the government. This office does not have the manpower or expertise to handle privatisation audit. As a result most privatisation deals are not appraised, and if audited take an unduly long time in finalisation of the reports.

    Why this arrangement has been done is very strange. One gets the impression that office of the CAG is simply not interested in doing the job of the audit of privatisation, professionally and speedily.

    Lack of Perspective

    Another major problem with the working of the office of the CAG is its lack of perspective and focus in evaluating disinvestment transactions. As disinvestment is a major national policy and involves substantial monetary transactions, it was desirable that every transaction is evaluated and report submitted to Parliament. It is not necessary that reports are brought out only when lapses are noticed. The idea of value for money audit is to give satisfaction that the operations of a public entity are being carried on with due regard to economy, efficiency and effectiveness. If it is found that transactions were done with due regard to financial prudence and propriety, CAG should say so in its report, which would give satisfaction to Parliament and the public, that business of government is being carried out properly and efficiently and public interest has been safeguarded.

    Due to the “selective” picking of privatisation transactions for audit, the CAG often gets involved in controversy and accused of partisanship. Take for example, the privatisation of India Tourist Development Corporation (ITDC) hotels. Nineteen hotels such as Kanishka, Ranjit, Ashoka Aurangabad, Kahjuraho, etc, were privatised by transferring 89.97 per cent equity. They were all loss-making, were a severe drain on the national exchequer and it was wise for the government to get out of the business of running them. But why has CAG not brought out an evaluation report on them, and commended the government, if transactions were found to be sound? Why has the CAG picked up only the HCI’s two hotels, Juhu Beach and Centaur at Mumbai for comments. Arun Shourie, the former minister for disinvestment has accused CAG of partisanship, in a series of articles he wrote in the Indian Express.13 He said that in case of privatisation of Delhi Vidyut Board, CAG has taken a softer approach, overlooked the faulty methodology of valuation; negotiations took place with only one bidder, and the new owners were conferred huge financial benefits.

    The sale of 4.2 per cent of Maruti’s residual shareholding held by the government, through public offering in July 2003,

    Economic and Political Weekly December 16, 2006

    evoked a big response, fetched Rs 1,000 crore and was recognised as a successful case of disinvestment. Why was this deal not commented on by CAG, and credit given to the government, if it was found to have done a good job, which inter alia may have helped in establishing a guidepost for future disinvestment?

    UK Practice

    In UK, where large-scale privatisation was undertaken during 1980s and 1990s, in every case, the National Audit Office (NAO) prepared an evaluation report for the Parliament and more or less acted as a quality assurance institution. A few cases will illustrate this: Sale of Scottish Power and Hydroelectric:14 The NAO made the evaluation with reference to objective set for the sale, which were: (i) completing the sale to a time table;

    (ii) maximising the net proceeds; and

    (iii) promoting increased individual share ownership. The NAO findings and conclusions were as under: (a) the department prepared a detailed project plan and followed appropriate procedures; (b) the department focused their marketing campaign on potential investors who would best meet their sale objectives; (c) the department carried out the sale of companies on favourable terms for the taxpayer, securing proceeds which were as high as could be expected; and (d) the department met their target for subscription levels from individual investors and were able to allocate a large proportion of the issues to individual investors, particularly to customers, employees and pensioners of the two companies.

    Sale of National Power and PowerGen:

    In the second sale of shares of National Power and PowerGen,15 the NAO told Parliament that the sale of government shareholding in the company was notably successful in achieving its objective of maximising net proceeds and widening and deepening share ownership.

    Sale of mining operations of British Coal Corporation: In the sale of mining operations of British Coal Corporation,16 the CAG told Parliament that the department of trade and industry took reasonable steps to maximise value for money. Outstanding debts of British Coal were extinguished and the benefits to pensioners guaranteed. The sale was widely marketed and competition generated for the business on offer. The NAO also identified a number of points as guidance for future sale.

    Sale of London Transport: In case of London Transport,17 where 10 operating bus companies were sold between September 1994 and January 1995, the NAO said that department of transport managed the sale effectively and met its objective. The sale was completed on target; no purchaser achieved more than 25 per cent shares; four companies were purchased by management and employee teams; and the proceeds were higher than expected. Sale of BP, BAA: In the sale of government residual shareholdings in British Pharmacopoeia (BP), British Airports Authority (BAA) and 28 other privatised companies,18 following major privatisations of the 1980s and 1990s, the NAO observed that the treasury selected a sound strategy which secured good to exceptional value for the taxpayer. The NAO concluded that treasury’s preferred method of “bought deal” – where shares are sold to an intermediary at fixed price – was sensible as most shareholdings were small.

    In the auction of Radio Spectrum for the third generation of Mobile Telephones19 in which Pound 22.5 billion was realised, the CAG told the Parliament (October 2001) that it was well designed and efficient. The CAG commended the radio-communication agency for successfully applying an innovative technique to allocate radio spectrum for the next generation of mobile phones to those operators who value it most. In doing so it managed to raise significant revenues and promote competition in the industry.

    Audit as Quality Assurance

    Considering the importance of audit of privatisation, the International Organisation of Supreme Audit Institutions20 (INTOSAI), which has 165 countries as members, has brought out detailed guidelines on best practices on audit of privatisation. The guidelines says, “A variety of sale methods are used, often in combination, and the processes are frequently complex, raising difficult legal, financial and accountancy issues. Parliaments and the public look to the SAI for reassurance that the sales have been efficiently and properly handled, particularly as regards obtaining lessons for the future sales.” The INTOSAI guidelines underline the point that public audit is basically a reassurance device, so that Parliament and the public is assured that privatisation has been efficiently and properly carried. Michel Power,21 a professor in the London School of Economics,

    Annexure: Proceeds from Disinvestment from 1991-92 Till Date, and the Methodologies Adopted

    Year Actual Methodology Receipts (Rs in Crore)

    1991-92 3037.74 Minority shares sold in December 1991and February 1992 by auction methods in bundles of “very good”, “ “good” and “average” companies.

    1992-93 1912.42 Shares sold separately for each company by auction method.

    1993-94 0.00 Equity of six companies sold by open auction but proceeds received in 1994-95. 1994-95 4843.10 Sale through auction method, in which NRIs and other persons legally permitted to buy, hold or sell equity.

    1995-96 168.48 Equities of four companies auctioned.

    1996-97 379.67 GDR (VSNL) in international market.

    1997-98 910.00 GDR (MTNL) in international market.

    1998-99 5371.11 GDR (VSNL)/domestic offerings with the participation of FIIs (CONCOR, GAIL). Cross purchase by three oil sector companies, i e, GAIL, ONGC and IOC.

    1999-2000 1860.14 GDR-GAIL, VSNL-domestic issue, BALCO restructuring, MFIL’s strategic sale and others.

    2000-2001 1871.26 Strategic sale of BALCO, LJMC; Takeover – KRL (CRL), CPCL (MRL), BRPL.

    2001-02 5632.25 Strategic sale of CMC – 51 per cent, HTL –74 per cent, VSNL – 25 per cent, IBP – 33.58 per cent, PPL – 74 per cent, and sale of hotel properties of ITDC and HCI; receipt from surplus cash reserves from STC and MMTC.

    2002-03 3347.98 Strategic sale: HZL (26 per cent), IPCL (25 per cent), HCI, ITDC, Maruti: control premium from renunciation of rights issue, Put Option – MFIL (26 per cent), Shares to employees in HZL, CMC and VSNL.

    2003-04 15547.41 Jessop and Co (72 per cent strategic sale), HZL (18.92 per cent Call Option), through Public Offer-Maruti (27.5 per cent), ICI (9.2 per cent), IBP (26 per cent), IPCL (28.945 per cent), CMC (26.25 per cent), DCI (20 per cent), GAIL (10 per cent) and ONGC (9.96 per cent).

    2004-05 2764.87 NTPC (5.25 per cent offer for sale), IPCL (5 per cent to employees) and ONGC

    (0.01 per cent). 2005-06 1567.00 By sale of shares to public sector financial institutions and public sector banks on

    differential pricing method. Total 49214.03

    Source: Department of disinvestment website:

    Economic and Political Weekly December 16, 2006 observes that there is an explosion of audit in Britain, in what he describes as an audit society. This is largely because the society demands an account be given of the persons responsible for an activity not only in terms of money that has been spent, but a check that an activity was carried out efficiently. The president A P J Abdul Kalam22 while addressing the conference of accountant generals (2005), observed, “auditing in the modern sense is a quality assurance phenomenon. It has to move from conventional quality control mechanism to a quality assurance institution through establishment of internal control and selfcontrol. Audit has to be proactive and alert the system before the occurrence of low performance.”

    Public Accounts Committee

    The reports of the CAG which are submitted to Parliament are remitted to the Public Accounts Committee (PAC) and the Committee on Public Undertakings (in the case of PSU), for detailed examination. As matters stand today the bulk of paras which feature in the audit reports are not taken up for examination by these committees. While this is an issue which needs to be addressed, there is an imperative need for the PAC to set the priority for work which CAG should do. In the US, where the government accountability office (GAO) is a powerful instrument of congressional oversight of the executive, 80 per cent of reports emanate as a result of congressional requests. In UK, through an amendment in NAO Act, the CAG is required to “take into account any proposals made by the Committee of Public Accounts”, though he is totally independent regarding the manner in which it carries on his examination. There is a need for the PAC to lay down a policy that all privatisation transactions should be evaluated by the CAG and report submitted within a strict time framework of, say one year, from the date of closure of the deal.

    Today while the government has abandoned the policy of privatisation in the sense that the “policy of passing management control of profitable PSUs by selling majority stake through strategic sale route” has been given up, disinvestment/ privatisation is very much a policy option. Some of the areas which need to be examined by CAG are given below:

    (a) Policy of public-private partnership: The government has recently awarded a contract for modernisation of Delhi and Mumbai airports to private parties amidst huge controversy. While the control of AAI, constituted under an act, will remain with government, a large part of its services will be provided by private operators. It needs to be ensured that the contractual arrangement entered serves the larger public interest and value for money has been realised. (INTOSAI has issued detailed guidelines on best practices on public/private finance and concession in October 2001.)

  • (b) Selling of residual shares in privatised former PSUs such as IPCL, CMC, BALCO, etc: The government needs to sell its residual shareholdings in all the companies which have been privatised and get out of their management, within a strict time framework. It needs to be examined whether best price has been secured.
  • (c) Shares of profitable PSUs: The present UPA government has sold shares of profitable PSUs such as NTPC, while retaining majority control. It needs to be examined, whether any national objective is being served by selling the shares and if an optimum price for them has been realised.
  • Concluding Remarks

    The Indian CAG should take lessons from the remarkable work done by the British CAG, who prepared performance audit reports for every privatisation deal. These reports had a positive orientation, assured the Parliament that privatisation is being done efficiently, lauded the work of departments who had struck innovative deals and came out with suggestions for improvement in subsequent round. This helped securing public’s favourable response to the policy of privatisation and reassured the policy-makers that they were on right track, emboldening them to pursue a more vigorous drive.

    The delayed submission of reports by the CAG in case of some of the privatised PSUs defeats its very purpose, and gives an impression that he is trying to secure political mileage. The CAG should demonstrate that he is doing his job with total objectivity. He should audit all privatisation/disinvestment transactions within a strict time limit and commend the work of government departments, when the deals have secured value for money. This would reinforce the faith of people in the government, make public officials take bold and innovative decisions and help in the success of the policy of publicprivate partnership.




    1 CAG, Report No 14 of 1993: Disinvestment of Government Shareholding in Selected Public Enterprises in 1991-92.

    2 Public Accounts Committee, 10th Lok Sabha, 75th Report, April 29, 1994. 3 CAG, Union Government, No 2 of 2005, Para 7.1, pp 41-50. 4 CAG, Union Government ( Commercial), No3 of 2004, Para 2.1.1, pp 6-7. 5 Report in The Times of India, New Delhi, March 12, 2003, p 11. 6 Report in The Economic Times, New Delhi, August 20, 2004, p 2.

    7 CAG: Union Government Civil, No 17 of 2006; Performance Audit of Disinvestment of Shareholding in Selected Public Sector Undertakings during 1999.

    8 Report in The Times of India, New Delhi, September 20, 2006, p 19.

    9 BALCO Employees Union vs Union of India: TC© No 9 and 10 of 2001 and WP © No 194 of 2001, December 10, 2001.

    10 Rajya Sabha: unstarred question No 2270, August 13, 2001.

    11 Rajya Sabha: starred question No 305, April 15, 2002.

    12 Rajya Sabha: unstarred question No 478, November 15, 2002.

    13 The Indian Express: Arun Shourie: May 22, 2005, August 19 and 20, 2005 and September 2, 2005; also see Jagdish Sagar on Delhi Vidyut Board, August 26 and 27, 2005.

    14 HMSO London, Report of the Comptroller and Auditor General: The sale of the Scottish Power and Hydroelectric, July 15, 1992.

    15 Website: NAO press notice, April 2, 1996; HC 310, 1995-96.

    16 Ibid press notice May 3, 1996; HC 360 1995-96.

    17 Ibid press notice December 14, 1995; HC 29, 1995-96.

    18 Ibid, February 27, 1997, HC 265, 1996-97.

    19 Ibid, October 19, 2001, HC 233, 2001-02.

    20 INTOSAI: Best Practices in Audit of Privatisation; November 1998 (a working group of 23 members including India, chaired by John Bourn CAG of UK deliberated over five years and have issued a set of 40 guidelines).

    21 Michel Power: The Audit Society, Oxford University Press, 1997.

    22 Website: presidentofindia.nic, speech delivered on September 20, 2005.

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