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Is govt mulling a cut in its stake in PSUs? The answer is, yes

The government has decided to modify the present policy of keeping its shareholding in a PSU at 51 percent, said Nirmala Sitharaman
New Delhi: Commenting on the issue of bringing down the government stake to below 51 percent in public sector undertakings (PSUs), Union Finance Minister Nirmala Sitharaman said on Saturday that the government has decided to modify the present policy of keeping its shareholding in a PSU at 51 percent. She added that the move will help increase retail participation and deepen the market. Sitharaman also said that it will be implemented in way that the government directly or indirectly, through state-owned enterprises, will hold a 51 percent stake in PSUs so that the public characteristic of the enterprise is maintained.

What exactly does that mean?

For instance, Sitharaman said, if the government owns 51 percent in a company and another PSU has 10 percent stake, then there is headroom to dilute 10 percent stake while still retaining the 51 percent stake. “So we are saying to that extent 10 (total 51 per cent government and government-run institutions together) the extra that is there can be released for employees, retail who want to possess by which the government control is not being diluted below 51 per cent,” she added.

‘NBFC crisis has bottomed out’

The Finance Minister also said that the NBFC crisis has bottomed out and from here on, it can only plateau rather than worsen. She added that the government, along with the Reserve Bank of India (RBI) will monitor the situation closely to ensure that the sector comes out of the wood. “Largely it (NBFC crisis) has reached a peak in terms of challenges that they are facing. The problem probably is not over yet but it can only plateau rather than worsen ... the deteriorating situation is reached its bottom ... now it has bottomed out,” she said. The statement comes a day after Sitharaman announced a number of measure in her maiden budget to bring relief to the non-banking finance companies which are facing cash-crunch in the aftermath of the IL&FS crisis last year.