Home / Budget / Economic Survey /  Strategic consolidation likely to be the mantra of PSE playbook

NEW DELHI : The Economic Survey said the coronavirus pandemic has “negatively impacted" the government’s 2.1 trillion disinvestment target for the current fiscal year.

Budget 2020-21 had envisaged to mobilize 2.1 trillion from disinvestment proceeds during the current fiscal year, of which 90,000 crore was envisaged for disinvestment in financial institutions. As on 20 January, the government has been able to raise 15,220 crore," the survey noted.

This comes against the backdrop of a new public sector enterprise policy articulated by finance minister Nirmala Sitharaman on 17 May, the details of which are likely to be announced in the Union budget on Monday. A recharged disinvestment playbook will also articulate the position of the private sector commanding the heights of the economy.

“The public sector enterprise policy enunciated by the government in November 2020 spells a complete change in paradigm as compared to its policy of import substitution and self-sufficiency which became the basis of the Mahalanobis Plan in 1956," the survey added.

While the government has been missing its disinvestment targets, the new policy may open the possibility of further consolidation of India’s 12 public sector banks. It will also chalk the way ahead for consolidation of strategic state-run firms and privatization of non-strategic ones.

“It has been argued that the existence of the CPSEs should only be in the ‘strategic sectors’. Accordingly, the number of PSEs in the strategic sector will be limited to four—others would either be merged or privatized or brought under holding companies," the survey said.

While articulating the way ahead for public sector enterprises, Sitharaman last year had said that a distinction will be made on the basis of strategic importance of such entities.

“Further, the CPSEs in non-strategic sectors would be privatized as per the guidelines issued. This initiative is expected to bring healthy competition in sectors and will also assist the government to focus extensively on ‘strategic sectors’," the survey noted.

The government is looking to raise around 90,000 crore from the privatization of Bharat Petroleum Corp. Ltd at double the valuation the stock is trading at, as the Centre seeks to benchmark its price to some of its publicly traded rivals, as reported by Mint earlier. Balmer Lawrie & Co. Ltd, Neelachal Ispat Nigam Ltd and BEML Ltd are among the next set of PSUs on the block for the disinvestment exercise.

“The government recognizes the need for opening up sectors to the private sector while PSEs play an important role in strategic areas. The focus is to embark on a significant privatization exercise of CPSEs and speeding up big-ticket strategic sale/privatization of large CPSEs such as Air India, BPCL, CONCOR and SCI," the survey added.


Utpal Bhaskar

"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout