Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,823.30-90.75
Stock Analysis, IPO, Mutual Funds, Bonds & More

Big shift in disinvestment policy: Plan to privatise profitable CPSEs in works

Niti Aayog may be told to draw up a list of non-strategic blue chip companies for sale.

, ET Bureau|
Jun 11, 2019, 06.57 AM IST
0Comments
BCCL
1
The government has set up a disinvestment target of Rs 90,000 crore for the current fiscal.
NEW DELHI: The government may now look to privatise profit-making state-run companies, marking a sharp shift from its earlier policy of disinvesting only loss-making central public sector enterprises (CPSEs).

It could ask Niti Aayog to draw up a list of non-strategic profitable companies that can be privatised, said a government official.

“Some initial discussions have been held.... This aspect can also be looked at after the alternate mechanism groups are notified,” the official said on condition of anonymity. The final call will be taken at the level of the Prime Minister's Office (PMO), he said.

ET had reported earlier this month that the government would soon reactivate the alternate mechanism route.

There is a view in certain sections of the government that the Aayog has so far only recommended those firms for strategic sale that have no value left and at best could be wound up.

The government has set up a disinvestment target of Rs 90,000 crore for the current fiscal. However, it has been unable to sell any CPSEs to the private sector despite having approval for 24 firms including Air India.

All these two dozen firms are loss-making entities such as Scooters India Ltd, Bharat Pumps & Compressors, Project & Development India Ltd, Hindustan Prefab, Hindustan Newsprint, Bridge and Roof Co and Hindustan Fluorocarbons.

“Niti Aayog alone can’t be blamed,” said another official. “They were working on a given mandate, but now maybe it’s time to expand the divestment framework.”

The official said that asset monetisation exercise is already on and that lock, stock and barrel stake is no more a taboo. “If the processes are right and the companies are non-strategic, then it should not be an issue,” the official said. “Companies like Rashtriya Ispat Nigam Ltd could be the first on the list.”

In February 2018, the cabinet had cleared the institutional framework for monetisation of identified non-core assets of the CPSEs under strategic disinvestment.

As per the Department of Investment and Public Asset Management (DIPAM) website, the current policy on strategic sale entails that the Niti Aayog will identify CPSEs for strategic disinvestment and it will also advise on the mode of sale, percentage of shares of the CPSEs to be sold and method for valuation.

Under the previous BJP-led NDA regime headed by Atal Bihari Vajpayee in the late 1990s, the government had sold its stake in companies such as Videsh Sanchar Nigam Limited, Hindustan Zinc, Balco and IPCL to private entities. The government had also pushed oil companies to buy stakes in each other.

Experts said that the government should keep all options open. “Both part stake sale and selling majority stake…. However, considering the sensitivity and longterm implications, the government will need to carefully tread the path of controlling stake sales,” said Jagannadham Thunuguntula, senior vice president at Centrum Wealth Management.
0Comments

Also Read

Finance ministry reworking strategic sale procedure for CPSEs

Government wants CPSEs to exit loss-making state-level entities

Government looking at REITS model to monetise land assets of CPSEs, enemy property

Govt preparing list of profit-making arms of CPSEs for listing

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for Live Elections News & Results, Latest News in Business, Share Market & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service