Finally, the experience in 1998-99 when the government exceeded its disinvestment target by a wide margin, was in substantial part the result of the decision to get cash-rich PSUs to "cross-hold" shares in related PSUs by buying the same off the government. Of the Rs. 9,000 crore garnered in 1998/99, only Rs. 1195.25 crore were raised through market disinvestment in Concor (Rs. 225 crores), GAIL (Rs. 184 crore) and VSNL (Rs. 786.25 crore). Much of the rest came from cross-holding investments by the oil PSUs, ONGC, GAIL and IOC. Cash rich public sector corporations were forced to buy-back the government's holding of their equity or the equity of other public sector enterprises. This amounted to forcing PSUs, that need resources to allow for restructuring in order to face up to the more liberal and competitive environment, instead to hand over their investible surpluses to finance the fiscal deficit of the government. As Chart 2 shows, in all three years in which disinvestment proceeds have been significant, they helped finance around 8 per cent of the fiscal deficit that would have shown up in the budget but for privatisation.
 
The 1999-2000 budget had provided for these sale proceeds to finance as much as 10 per cent of the projected deficit without privatisation. With just 3 months to go, the government has managed to raise just about Rs. 1,500 crore of the budgeted Rs. 10,000 crore, much of which has been garnered by the distress sale of GAIL shares. While factors like the elections did tie the government's hands a bit, the main reason for this year's failure on the disinvestment front is the unwillingness of private buyers to offer the government a reasonable price for its shares. The government had, in fact, to defer the launch of its plan to sell an additional 19 million shares, which was expected to yield $100 million because of the low prices that were on offer in the market.
 
Faced with this situation the government appears to be resorting to two options, First, to use a revised version of the cross-holding route. Power Minister Rangarajan Kumaramangalam recently created a stir by announcing the government's 'decision' to transfer its shareholding in the National Hydroelectric Power Corporation (NHPC), which reportedly survives on a budgetary handout of Rs. 450 crore every financial year, to the National Thermal Power Corporation (NTPC), for a princely sum of Rs. 4,500 crore.
 
Among the reasons for the transaction, the Minister clearly declared, was the effort to garner the resources needed to meet the target of Rs. 10,000 crore from privatisation set in the budget. Virtually pre-empting the question as to where the NTPC itself was to find the money to pay the government, Kumaramangalam's statement described a structured process in which the NTPC would hive off a few of its units into a new subsidiary. Subsequently, 51 per cent of NTPC's holding in the subsidiary would be offloaded to the private sector. That strategic sale was expected to yield the resources to pay the government Rs. 2,500 crore this financial year and Rs. 2,000 crore in the next financial year.