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DIPAM releases new public sector policy; AAI, Railways, India Post outside policy scope

DIPAM has released a new public sector policy which is a blueprint of the announcements made by Finance Minister Nirmala Sitharaman in Budget 2021-22

DIPAM has released a new public sector policy which is a blueprint of the announcements made by Finance Minister Nirmala Sitharaman in Budget 2021-22.
DIPAM has released a new public sector policy which is a blueprint of the announcements made by Finance Minister Nirmala Sitharaman in Budget 2021-22.
  • The blueprint has put Niti Aayog in charge of recommending the names of PSUs in strategic sectors which will be privatised or retained within government control

  • The new public sector policy keeps PSUs in the nature of development and regulatory authorities, autonomous organisations, trusts, etc, outside its scope

New Delhi: The Department of Investment and Public Asset Management (DIPAM) has released a new public sector policy on Thursday which is a blueprint of the announcements made by Finance Minister Nirmala Sitharaman in Budget 2021-22. According to the policy, a bare minimum number of PSUs will be retained in strategic sectors, while those in non-strategic sectors will be privatised, merged or shut down. The blueprint has put Niti Aayog in charge of recommending the names of PSUs in strategic sectors which will be privatised or retained within government control. It has also put certain categories of PSUs outside of the scope of the policy, citing various reasons.

The notification released by DIPAM said that the policy has been approved by the Cabinet on January 27 for an ‘Atmanirbhar Bharat.’

Strategic, non-strategic sector PSUs

The strategic sectors have been delineated based on the criteria of national security, energy security, critical infrastructure, provision of financial services and availability of important minerals. The list of such sectors includes, atomic energy, space and defence, transport and telecommunication, power, petroleum, coal and other minerals, banking, insurance and financial services. 

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“In strategic sectors, bare minimum presence of the existing public sector commercial enterprises at Holding Company level will be retained under Government control. The remaining enterprises in a strategic sector will be considered for privatisation or merger or subsidiarization with another PSE or for closure,” the policy stated. In non-strategic sectors, however, PSUs will be considered for either privatisation or closure, it added.

Procedure for disinvestment/privatisation of PSUs

According to the new public sector policy, Niti Aayog will make recommendations to the government as to which PSUs in strategic sectors are to be retained within government control or to be considered for privatisation or merger or subsidiarisation with another PSU or are to be closed. The recommendations will be considered by a Core Group of Secretaries on disinvestment (CGD).

The recommendations made by the CGD will then be considered and approved by an Alternative Mechanism on strategic disinvestment, which will consist of Finance Minister Nirmala Sitharaman, ministers of the administrative ministries concerned, and Minister for Road Transport and Highways Nitin Gadkari. DIPAM will be responsible for obtaining in-principle approval from the CCEA for the strategic disinvestment of a specific PSU from time to time and on a case to case basis, the policy read. 

PSUs that are outside the scope of the policy

The new public sector policy keeps PSUs in the nature of development and regulatory authorities, autonomous organisations, trusts, development financing/refinancing institutions, some of which have been created through the Acts of Parliament, outside its purview. According to DIPAM, such entities include major port trusts, Airports Authority of India (AAI), not-for-profit companies, PSUs that provide support to vulnerable groups, assist farmers, undertake security printing and minting, maintain critical data having bearing on national security and departments of the government, like Railways and post, which undertake commercial operations with a development mandate.

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