Friday, September 30, 2022

Modi 2.0 to reactivate Alternative Mechanism for disinvestment of PSUs

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New Delhi: The freshly-minted government at the Centre is soon going to reactivate the alternative mechanism that was first put in place by previous Narendra Modi regime to accelerate the strategic sale of public sector undertakings (PSUs). The mechanism consists of select ministers who have the power to decide on the timing, price and amount of shares of a state-run company to be put on the block for outright sale.

The mechanism needs to be notified about every strategic sale.

Alternative Mechanism allows quick decisions

Under the previous regime, the alternative mechanism was set up with approval from the Cabinet Committee on Economic Affairs (CCEA). The mechanism makes way for quick disposal of strategic sale proposals as they need not be cleared by the CCEA.

The previous mechanism consisted of the finance minister, the road transport and highways minister and the minister of the relevant department as members. The composition of the mechanism is, however, expected to undergo a change this time.

Target 2020

The CCEA has given its nod to setting up of the mechanism in all cases for strategic disinvestment of PSUs, wherever it has given ‘in-principle’ approval for such a sell-off.

A specific alternative mechanism exists for Air India.

Govt hoping to raise Rs 90,000 cr from disinvestment

In financial year 2019-20, the Centre is likely to push strategic sales and asset monetisation to meet its ambitious target of Rs 90,000 crores for capital expenditure. The Department of Investment and Public Asset Management or (DIPAM), however, is aiming to exceed the target in order to raise more funds than what is required to meet capex, so that it could also fund new social welfare programmes.

The target is likely to be revised ahead of the full budget that is to be presented on July 5.

A full list of the PSUs that will be put up for strategic sale includes Air India and has been drawn up by Niti Aayog.
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In financial year 2017-18, 71 out of 257 operational central public sector entities reported losses, taking the total value to Rs 31,260 crore. State-run BSNL and MTNL posted a combined loss of nearly Rs 11,000 crore. Air India, on the other hand, accounted for Rs 5,338 crore of the total figure.

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