Govt sets FY22 disinvestment target at Rs 1.75 lakh cr, puts asset monetisation high on priority

  • While exuding confidence that FY21 disinvestment plans will be completed in FY22, the FM said that Niti Aayog has been tasked with preparing next list of PSUs for disinvestment

  • The Finance Minister said that a National Monetisation Pipeline of potential brownfield infrastructure assets will be launched

New Delhi: For FY2021-22, the government has set for itself a disinvestment target of Rs 1.75 lakh crore, said Finance Minister Nirmala Sitharaman while presenting the Union Budget 2021-22 on Monday. While exuding confidence that the big-ticket disinvestment plans that have spilled over from FY2020-21 will be completed in FY2021-22, the Finance Minister said that the government has tasked Niti Aayog with preparing the next list of PSUs that will be taken up for disinvestment. The Budget 2021-22 also placed monetisation of PSU assets high on the agenda with the announcement of a national pipeline for monetisation of brownfield assets owned by public sector companies.

4 strategic areas identified, PSUs in other sectors to be privatised or closed down

Sitharaman said that the government has identified four strategic sectors where a bare minimum number of PSUs will be retained. These sectors are — atomic energy, space and defence, transport and telecommunications, power, petroleum, coal and other minerals, banking, insurance and financial services. 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. 

Agenda FY22: Privatisation of 2 PSBs, one general insurance company

“A number of transactions namely Bharat Petroleum Corporation Ltd (BPCL), Air India, Shipping Corporation of India (SCI), Container Corporation of India (CONCOR), IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Limited (NINL) among others are proposed to be completed in FY 2021-22,” the minister told the House. She also added that other than IDBI Bank, a proposal for privatisation of two Public Sector Banks (PSBs) and one general Insurance company will be taken up in the year 2021-22. The IPO of LIC would also be brought in through requisite amendments in the session itself, said Sitharaman.

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. 

National pipeline for PSU Asset Monetisation

Asserting that monetising operating public infrastructure assets is a very important financing option for new infrastructure construction, the Finance Minister said that a National Monetisation Pipeline of potential brownfield infrastructure assets will be launched. “An Asset Monetisation dashboard will also be created for tracking the progress and to provide visibility to investors,” she added. 

“National Highways Authority of India (NHAI) and Power Grid Corporation of India Ltd (PGCIL) each have sponsored one InvIT that will attract international and domestic institutional investors. Five operational roads with an estimated enterprise value of Rs 5,000 crore are being transferred to the NHAI InvIT. Similarily, transmission assets of a value of Rs 7,000 crore will be transferred to the PGCIL InvIT,” the minister said. 

GAIL, Indian Oil, HPCL pipelines, DFC assets, airports to be monetised

Detailing the asset monetisation plan, the minister said that the Railways will monetize Dedicated Freight Corridor assets for operations and maintenance, after commissioning, next lot of airports will be monetised for operations and management concession, NHAI Operational Toll Roads, more transmission assets of Power Grid, oil and gas pipelines of GAIL, Indian Oil and HPCL, AAI airports in Tier II and III cities, warehousing assets of CPSEs such as Central Warehousing Corporation and NAFED and sports stadiums.

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The minister also announced that 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 minister 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.

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