We will list more central PSUs to unlock their real value: Neeraj Kumar Gupta

New Delhi: In the Union budget 2016, the department of disinvestment (DoD) has been renamed as the department of investment and public asset management (DIPAM) with greater focus on strategic disinvestment. DoD secretary Neeraj Kumar Gupta explains the government’s new strategy of disinvestment. Edited excerpts of an interview:

Given that governments over the years have been repeatedly failing to achieve disinvestment targets, isn’t the 56,500 crore target for 2016-17 ambitious?

Try to understand that we have almost 235 CPSUs (central public sector undertakings). Out of them, 160 are profit-making and only 44 are listed. Even these 44 listed CPSUs, if you examine in terms of market capitalization, we are commanding 12-13% of the total market cap. There is a huge set (of CPSUs) available to play with or to operate with. And when we talk of any target, we have to see it against this possibility. Leaving them aside, there are a lot many that have to be listed during the year. There can be many other instruments of disinvestment which are permitted as per law and as per Sebi (Securities and Exchange Board of India) regulations. So, government has various possible options available. But the target that has been given by the government to this department, it reflects government’s expectation that more resources need to be mobilized because it has committed much higher expenditure in the economy.

For this department, which has to achieve this target, market volatility is a challenge. So, we have to operate within that and make the best possible endeavour to achieve the target. The department is now alive to the expectation of the government. We will see that we do not fail to meet expectations.

So, another strategy will be to list more CPSUs on the market?

This has been a consistent policy. There are many CPSUs in the pipeline. Listing requirements are there and we will definitely try to list the CPSUs so that their real value is unlocked.

Have you shortlisted any for this?

I will not like to name or quantify the number of CPSUs to be listed. But I can tell you the approach of the government is very clear on this issue.

What is the new approach in strategic disinvestment that the government is talking about?

Strategic disinvestment as a policy commitment made by the finance minister in last year’s budget speech has now been put into practice on 29 February. We have now put out all the office memoranda and executive orders which makes it operational now. Instead of creating another organization, government believes in “less government and more governance”. So, NITI Aayog has been assigned the advisory role. Earlier, this role used to be done by the disinvestment commission. NITI Aayog will play the role of adviser on which CPSUs to divest strategically, what should be the method of evaluation of the CPSUs, what should be the mode of transaction and to what extent we should divest.

NITI Aayog will have a consultation with administrative ministries, department of public enterprises and whosoever they want and give a suggestion to the government. That suggestion will be taken up by the government and a decision will be taken on strategic disinvestment.

Should not the disinvestment department be playing that role?

No, it has to be an independent role because a lot of inter-ministerial consultation, a lot of independent thinking, a lot of national perspective and a lot of economic thinking is required. Thinking and advisory has always been beyond the department.

The department of disinvestment has now been renamed as the department of investment and public asset management. What is the thinking behind this?

It is a clear paradigm shift. It really underlines the new approach and focus of the government on investment in CPSUs. When we talk of disinvestment, it is part of the process of managing investment. The whole activity of management of investment is to generate higher economic activity directly or indirectly and also if required, augment government resources for directly spending on the economy. So, divestment is just one part of managing investment.

What are the new responsibilities that the department will handle?

The department will help in managing the financial aspects of CPSUs such as capital restructuring, leveraging of assets, bonus policy, dividend policy and capital expenditure. All these will be addressed from the perspective of an investor. All these should converge to higher economic activity and unlocking the value of the assets within CPSUs for either direct investment by them or resource augmentation for the government.

There is also a department of public enterprises (DPE). Won’t Dipam’s new functions clash with those of DPE?

DPE gives broad guidelines on all operational and functional issues of CPSUs. The financial issues are being handled by the different wings of the finance ministry. All these need to have a single focus and convergence in policy, so that they meet the common objective.

The finance minister said asset diversion or asset recycling will be part of this new disinvestment approach. So, what exactly do you want to achieve through this?

Again, it is linked to investment management. While thinking of new investments and new projects, CPSUs should first try to leverage their own assets. When you run a business, many a time you withdraw from a business, many a time you acquire a business. There is always a process of business restructuring. What we are trying to say here is unlock the value of your assets. So, if you have within your system assets which are not giving you best returns, you can divest. So, this department will be providing guidelines or advisory as and when required for such activities.

Have you prepared a list of the CPSUs that may be ready for strategic disinvestment?

No. Every year, an economic survey is done of all CPSUs and it is in the public domain. All information about CPSUs is available. Previous disinvestment commission reports are also available. I am sure NITI Aayog will do whatever is best.