Big Privatization Ahead……

The Centre is reportedly considering cutting the number of state-run enterprises to mere around 24, from over 300 at present, following the new policy that emphasises on privatisation in non-core sectors, while closing down state-owned companies. Last week, Finance Minister Nirmala Sitharaman had announced big-ticket privatisation agenda in the Budget 2021-22 and laid the road map for overhauling central public sector enterprises (CPSEs) with the unveiling of the broad details of the privatisation policy. FM Sitharaman had announced strategic divestment in two public sector companies and financial institutions, including two state-controlled banks and one insurance company, in the next fiscal year. The Union Cabinet will take a final call on the numbers as per recommendations by government think tank NITI Aayog, which has been tasked with identifying the next set of enterprises to be offered for strategic stake sale, people with knowledge of the matter told ToI. The budget has unambiguously mentioned that there will be only four key strategic sectors and in these key sectors, there will be a maximum of three or four public enterprises. FM Sitharaman has said for the first time the Centre has formulated a clear strategy on divestment so that taxpayers’ money is spent wisely, mentioning that the government wants few public sector companies in key sectors to do well in order to ensure that taxpayer money is spent judiciously. In her budget speech, the finance minister had identified atomic energy, space, defence, transport, telecommunications, power, petroleum, coal and other minerals and banking, insurance and financial services as strategic sectors. The policy mentions that in the strategic sectors, there will be a bare minimum presence of government-owned companies. The remaining CPSEs in the strategic sector will either be privatised or merged with other CPSEs or closed. In non-strategic sectors, CPSEs will be privatised, otherwise shall be closed. Worth mentioning here is that the policy marks a big shift in the government’s approach towards privatisation of PSEs and highlights its pledge to continue with the process. Plus, there is a clear shift to rope in the private players and global investors to bring in proficiency and provide much-needed fund for the government to aid revive the coronavirus-ravaged economy. As on March 31, 2019, there were 348 central public sector undertakings, out of which 249 were operational. Remaining 86 were under construction and 13 were under closure, according to the daily which cited the Public Enterprises Survey 2018-19. Government officials mention that there were approximately 12 consulting companies firms, such as Engineers India, where the interest may be low. “It will be easier to set up a new consulting company, and get manpower from some of the PSUs, instead of taking over the entire baggage,” the daily quoted a senior official as saying. Plus, the Centre also need to wisely weigh the inclination for a large stake sale. Back to back privatisation of firms in sectors such as oil may not find too many buyers or bring the government ample value. An officer said: “We have to calibrate our strategy. It will also depend on the condition in the sector.” 

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