Tuesday, May 24, 2022

Bare minimum PSUs will be retained in strategic sectors: DIPAM Secretary

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  • "Ministerial panel will decide which all PSUs will be retained in the strategic sectors"

  • Niti Aayog is working on the preliminary list of CPSEs, which could be taken up for strategic disinvestment

New Delhi: A panel of Ministers, comprising Finance Minister Nirmala Sitharaman and Road Transport Minister Nitin Gadkari, will take the final call on the number of public sector companies that will be retained in each of the strategic sectors, DIPAM Secretary Tuhin Kanta Pandey said on Wednesday. The government in the Budget 2021 unveiled the disinvestment and strategic disinvestment policy and identified four sectors vis-a-vis Atomic energy-Space and Defence, Transport and Telecommunications, Power-Petroleum-Coal and other minerals, and Banking-Insurance and financial services, as strategic sectors, where bare minimum PSUs will be retained. Most are going to be disinvested or strategically disinvested.

In the rest of the sectors, the Central Public Sector Enterprises (CPSEs) are going to be privatised. Niti Aayog is working on the preliminary list of CPSEs, which could be taken up for strategic disinvestment.

DIPAM Secretary Tuhin Kanta Pandey said that the strategic disinvestment policy is an important directional shift and gives a broad idea to the private sector about which companies could be up for sale. "The idea is bare minimum will be retained. There the GoM has been constituted, which is an Alternative Mechanism (comprising) Finance Minister, Road Transport Minister and Ministers from the Administrative Ministry. The Alternative Mechanism will decide which is the bare minimum that would be retained in any particular sector".

"The strategic sectors have been classified in four broad baskets that are national security, critical infrastructure, energy and minerals and financial services," Pandey told news agency PTI in an interview.

He said bare minimum to be retained means rest can be privatised, or can be closed, or merged, or made a subsidiary of another CPSEs.


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"So, there is a very big restructuring of the public sector that is taking place. This is a policy which will operate over a period of next few years. That opens up the work of the government and indicates to the private sector what the government has in mind. We need private sector interest to revive in order to do capital formation," Pandey added.

"In line with the policy announced in May 2020, the government has decided to either privatise or merge or close PSUs in non-strategic sectors" Sitharaman had said on the Budget day.

The government aims at making use of disinvestment proceeds to finance various social sector and developmental programmes and also to infuse private capital, technology and best management practices in Central government Public Sector Enterprises, said the Ministry of Finance in an official statement.

"bare minimum to be retained means rest can be privatised, or can be closed, or merged, or made a subsidiary of another CPSEs"- Tuhin Kanta Pandey (IAS), Secretary, DIPAM

In order to incentivise states to take to disinvestment of their public sector companies, an incentive package of Central Funds for them will be worked out. Recognising that idle assets will not contribute to AtmaNirbhar Bharat and the non-core assets largely consist of surplus land with government ministries/departments and Public Sector Enterprises, the government has proposed to use a Special Purpose Vehicle (SPV) in the form of a company to carry out monetisation of idle land. This can either be by way of direct sale or concession or by similar means. Sitharaman also proposed to introduce a revised mechanism that will ensure timely closure of sick or loss-making CPSEs.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)

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