Centre Officially Lines Up 23 CPSEs for Disinvestment

The BJP-led government has officially decided to disinvest 23 Central Public Sector Enterprises (CPSEs). On July 22, the Ministry of Finance informed Parliament that the government has given ‘in-principle’ approval for strategic disinvestment of CPSEs including subsidiaries, units and joint ventures with sale of majority stake of Government of India and transfer of management control.

The budget estimate for disinvestment for FY 2019-20 has been set at Rs. 1,05,000 crore. The same target had been declared in the Union Budget by Finance Minister Nirmala Sitharaman.

When asked about the details of methodology followed by the government in making disinvestments in loss-making Public Sector Undertakings (PSUs) so that fair price is realised for government stakes, Minister of State for Finance and Corporate Affairs, Anurag Singh Thakur said “profitability is not a criterion for strategic disinvestment”.

Also read: Disinvestment of Salem Steel Plant: Workers Accuse SAIL for Loss of Profit

“Strategic disinvestment has been guided by the basic economic principle that the government should not be in the business to engage itself in manufacturing/producing goods and services in sectors where competitive markets have come of age, and economic potential of such entities may be better discovered in the hands of the strategic investors due to various factors, e.g. infusion of capital, technology up-gradation and efficient management practices,” he said.

In addition, he said that the government would also be able to monetise its investment in CPSEs. As per the government, the proceeds from strategic sale will depend on various factors, including prevailing market conditions, at the time of actual sale.

The list of 23 CPSEs that are lined up for disinvestment include Project & Development India Ltd., Hindustan Prefab Limited (HPL), Engineering Project (India) Ltd., Bridge and Roof Co. India Ltd., Pawan Hans Ltd, Hindustan Newsprint Ltd (subsidiary), Scooters India Limited, Bharat Pumps & Compressors Ltd, Hindustan Fluorocarbon Ltd. (HFL) (sub.), Central Electronics Ltd, Bharat Earth Movers Ltd. (BEML), Ferro Scrap Nigam Ltd.(sub.) and Cement Corporation of India Ltd (CCI).

Nagamar Steel Plant of National Mining Development Corporation, Alloy Steel Plant, Durgapur of Steel Authority of India Ltd (SAIL), Salem Steel Plant of SAIL, Bhadrawati units of SAIL, Air India and its five subsidiaries and one joint venture, HLL Life Care, Indian Medicine & Pharmaceuticals Corporation Ltd. (IMPCL), Karnataka Antibiotics, Kamrajar Port, Indian Tourism Development Corporation (ITDC), etc., are also included in the list.

Also read: Centre Reaffirms Disinvestment of Profit-making BEML

Earlier on July 8, Thakur had said in Parliament that the government has no plans to revive the listed PSUs instead of disinvestment. As mandated by the government, NITl Aayog has classified CPSEs into "high priority" and "low priority", based on (a) National Security (b) Sovereign functions at arm's length, and (c) Market Imperfections and Public Purpose. The CPSEs falling under "low priority" are scheduled for strategic disinvestment.

Workers Protest Against Disinvestment

Meanwhile, workers and their unions have been opposing the centre's decision to sell off these national assets. The workers in many of these PSUs have demonstrated against the disinvestment drive which is leading these units to total privatisation. In the first week of July this year, workers from SAIL’s all three special steel plants - Alloy Steel Plant (ASP) in Durgapur, West Bengal; Salem Steel Plant (SSP) in Salem, Tamilnadu; and Visheshwarya Iron and Steel Ltd (VISL) in Bhadravathi, Karnataka- had gone on strike agitating against this move and called upon the working class of the country to unitedly resist such moves of the government.

On July 4, the Centre had floated global tenders for strategic sale of Salem Steel Plant along with other CPSEs. Opposing this, Salem Steel Plant workers resorted to total strike and staged demonstration before the factory gate. PSU workers of Bharat Heavy Electrical Ltd (BHEL) in Ranipet and Trichy units also staged demonstrations in solidarity with the Salem steel workers.

Also read: After Talk Of ‘Revival’, Modi Government May Sell Off Air India Entirely

Again on July 12, in response to the call of Steel Workers’ Federation of India which is affiliated to the Centre of Indian Trade Unions (CITU), protest demonstrations were held inside the ASP premises and in front of the general manager’s office. Such protests were staged in various CPSE units including all SAIL units in different parts of the country.

Disinvestment Drive

During the past two years, the government has disinvested five CPSEs including Hindustan Petroleum Corporation Limited (HPCL), Rural Electrification Corporation Limited (REC), National Projects Construction Corporation Ltd (NPCC), Hospital Services Consultancy Corporation Limited (HSCC) and Dredging Corporation of India Limited (DCIL).

During March this year, the government had accorded approval for Strategic Disinvestment of 100% Government of India (GOI) shares in DCIL in favour of consortium of 4 ports, namely, Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust (formerly known as Kandla Port Trust). The share purchase agreement was executed between GoI and the four ports on March 8, 2019. With this, the 73.47% holding of GoI in DCIL had been transferred to the four ports as under these trusts. Through this strategic sale, the Centre has mobilised a total amount of Rs 1,049 crore.

With this transfer of shares, the management and control of the company has also been transferred to the four ports. Visakhapatnam Port Trust has 19.47% of paid up share capital. Deendayal Port Trust, Jawaharlal Nehru Port Trust and Paradip Port Trust have paid up shares of 18% each.

In the case of REC, the Cabinet Committee on Economic Affairs had approved the strategic sale of government’s 52.63% shares to Power Finance Corporation (PFC) along with transfer of management control. Again, the government, which had 51.11% stakes in HPCL sold the stakes to Oil and Natural Gas Corporation (ONGC).