Aiming at the ambitious target of Rs 1.05 lakh crore in the current fiscal, the central government is planning to add 10 more Central Public Sector Enterprises (CPSEs) to the list of companies which are enlisted for strategic disinvestment. Finance Minister Nirmala Sitharaman in her maiden budget, which was presented in Parliament on July 5, declared that the Centre has set a record high disinvestment target of Rs 1.05 lakh crore for the current fiscal year.
Department of Investment and Public Assets Management (DIPAM) Secretary Atanu Chakraborty on last Friday said: “The number of listed CPSEs is 59. We are going to add 10 more this year,” he said, adding that 3-4 CPSEs are also likely to come out with follow on offers or offer for sales.
Though in the last five years, the government has not been able to privatise any public sector undertaking under strategic disinvestment, DIPAM is hopeful of pushing forward some proposals in the current fiscal, Chakraborty said. The companies, which are lined up for initial public offering (IPO) include THDCIL, RailTel, TCIL, Water & Power Consultancy Services and FCI Aravali Gypsum.
In her budget speech, Sitharaman had also asserted that disinvestment of CPSEs would be a priority of the Modi 2.0 government. “Strategic disinvestment of select CPSEs will continue to remain a priority for this government. The government would not only re-initiate the process of strategic disinvestment of Air India, but would offer more CPSEs for strategic participation by the private sector," she had said.
On whether the target would be achieved in the current fiscal, Chakraborty said there is a “cynicism” about disinvestment. “In last three years, it has steadily moved. Over the last two years, the trajectory that one has seen should be adequate to convince people that perhaps the target will come through, though they are strongly affected by the way market moves,” he said. With regard to the criticism that government is selling off the family silver, Chakraborty said that in 2014, the value of government holdings in listed entities was Rs 8.01 lakh crore.
Although the government during 2014-2019 raised Rs 2.80 lakh crore through disinvestment, he said, adding that the total value of government holding in listed companies at the end of June was Rs 8.17 lakh crore.
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On the Budget proposal of increasing minimum public holding in listed companies from 25% to 35%, Chakraborty said that promoter holdings in most of the CPSES are in the range of 65% or below. “However, for private sector, I have seen some reticence, but if a company is public limited why the reticence for giving a wider ownership, which is the basic principle? Perhaps time, the manner of doing and the regulation, which is the domain of SEBI,” he said.
Sitharaman, in her budget speech, had added that the time is right to consider increasing minimum public shareholding in the listed companies. “I have asked SEBI to consider raising the current threshold of 25% to 35%”. Finance Secretary Subhash Chandra Garg said that the market regulator SEBI is being requested to hold stakeholder consultations to find out the arguments in favour of and against the move, and decide what kind of regime would be appropriate for India to move beyond 25%.
The leading trade unions have been expressing strong dissent over the government’s decision to sell off public sector undertakings (PSUs). “The Budget targeted for earning Rs 1.05 lakh crore from strategic sale and disinvestment of PSUs is another dubious method of handing over national productive assets on a platter to private business. Along with that, the Budget has proposed the minimum public holding of shares in companies would be made 35% (from present 25%) making the disinvestment of PSU shares to the tune of minimum 35% fate accompli,” Centre of Indian Trade Unions (CITU) said earlier in a press statement.
In the initial phase of disinvestment, companies have been disinvested saying that those are loss-making and would be a liability to the government. Later, profit-making companies were also enlisted in the target group for disinvestment. As per DIPAM, there are 183 unlisted CPSEs and out of these as many as 100 companies are profit making and the rest of 83 are incurring losses.
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According to the data from DIPAM, the disinvestment of Rail Vikas Nigam Ltd has been initiated in the financial year of 2019-20. In 2018-19 financial year, disinvestment had been done in major CPSEs including Oil and Natural Gas Corporation, Coal India Ltd, Bharat Heavy Electricals Ltd. (BHEL) etc. While strategic disinvestment had taken place at HSCC (India) Ltd, Dredging Corporation of India Ltd and National Projects Cons. Corp. Ltd. (NPCC).
Earlier, in the last week of May, shortly after the Modi government had returned to power with a landslide victory in parliament elections, NITI Aayog Vice Chairman Rajiv Kumar said that the government’s focus would be on fully privatising or closing more than 42 state-owned companies in the coming months. To achieve that, the government is even ready to lifting the foreign direct investment cap – necessary in case of Air India.
Following that, in the first week of June, NITI Aayog identified more than 50 assets land and industrial plants of public enterprises including NTPC, Cement Corporation of India, Bharat Earth Movers Ltd and Steel Authority of India Ltd and the they hope that the list would help the administrative ministries and the public sector companies to initiate the sale process.
“We should (start with the banks). There will be a big bang, there will be 100 days action. We are all geared for that … I have maintained that the fiscal policy should be counter cyclical. There is scope for that,” said Rajiv Kumar.
With inputs from PTI
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