Home / Economy / Disinvestment plan aims to up efficiency and investments: FM
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Finance minister Nirmala Sitharaman said that the government’s disinvestment strategy is aimed at boosting the production and efficiency of state-run companies and attracting investments into the companies instead of shutting them down.

Sitharaman said the performance of public sector enterprises privatized between 1994 and 2004 had improved and are being now run by professional boards. The new public sector enterprise or PSE policy has opened up all sectors for private investors, including space and nuclear energy, she said at Azadi Ka Amrit Mahotsav celebrations in Bengaluru.

“The principle with which disinvestment is happening now is not to shut down a unit. The economy needs that many companies and many, many more. So, if we want to have that activity done professionally and open up spaces for people to come and do it, our interest is not to shut down. We want to have them run far more efficiently so that contributions can be made to the economy," Sitharaman said on Friday.

The government has lined up over half-a-dozen companies for strategic sale, including Shipping Corporation of India, CONCOR, Vizag Steel, IDBI Bank, Nagarnar Steel Plant of NMDC and HLL Lifecare.

A senior finance ministry official said the government was planning to come out with an expression of interest (EoI) document for the sale of shares in IDBI Bank by next month after getting clarity from the Reserve Bank of India on the structure and deal size of the proposed sale.

The government recently conducted roadshows in the US. Based on the feedback from investors, the government will seek clarity on the deal size, guidelines or conditions on mergers, consortium composition and the glide path for the government to reduce its equity holding in the bank.

“Roadshows will now be done in India. The policy decision on corporates owning banks is non-negotiable, so that’s not even on the table for discussion. There is flexibility (to decide on the stake to be sold by the government), but control has to be passed on," he said, asking not to be named as the discussions were not public.

The government holds a 45.48% stake in the bank, while Life Insurance Corp. of India owns 49.24%. Stake sales by both entities will be decided.

On the strategic sale of Shipping Corp. of India, BEML and NMDC, the official said that the demergers of all three companies’ non-core assets from core operations were progressing. The sale process would pick up pace after the demergers are concluded. Mint reported last month that SCI’s Mumbai headquarters Shipping House, a training institute in Powai and some other properties will not be sold but instead be transferred to the demerged Shipping Corp. of India Land and Assets Ltd. As part of its strategic disinvestment strategy, the government will transfer its entire shareholding of 63.75% in SCI along with management control to a private entity.

In the case of Hindustan Zinc Ltd, the government will sell its holding via an offer for sale, the official added.

So far in the current fiscal year, the government has mopped up over 24,000 crore from disinvestments, including the public listing of LIC. The target for the full year has been set at 65,000 crore. In the last fiscal year, over 13,500 crore was realized via disinvestment, which also includes the amount realized via the privatization of Air India.

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