NEW DELHI: The cabinet is expected to clear the plan to cut majority stake in around 20 state-run firms on Wednesday , including several profit-making entities, signaling a restart of equity sale in public sector companies after a 12-year gap. There will also be a detailed review of the plan to shed 10% stake in public sector general insurance companies, a move aimed at helping the insurers raise funds to take on private sector players.
“The aim is to ensure that these PSUs are run professionally and there is greater value in these entities, paving the way for the government to dilute its stake in the years ahead,“ said a source. Another source said it was a mix of profit and loss-making entities.
The PSUs identified include Bharat Earth Movers, which is profitable, Certification Engineers International and others such as loss-making Scooters India. Sources said NITI Aayog, the government think-tank that firmed up the disinvestment policy for the Narendra Modi government, had recommended strategic sale in several PSUs, that would result in bringing down the Centre’s share in these entities to under 50%.
The NITI Aayog has argued that this model will help maximize revenue while focusing on strategic sectors such as oil or segments where the government wants to avoid a dominant role of the private sector. As a result, the move to shed stake in Container Corporation (Concor) where the government holds nearly 57% stake, through the “strategic sale“ route was dropped.
Concor controls nearly three-fourths of the market and is seen to be a vital link in the government’s efforts to boost the logistics network. Similarly , Bhel is seen as another strategic company , although the government is not averse to selling a stake in some of its arms.
The push for disinvestment comes at a time when the government is looking to bolster its finances. Although it is comfortable at the moment, especially with flows from the Income Disclosure Scheme by end of the year, it may have to deal with a shortfall in revenue from spectrum auctions.
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Source: Economic Times
