Panel wants Centre to pare stake in PSUs

NITI Aayog and the department of investment & public asset management started discussions in March to identify companies where the government could divest

The Centre’s share in those public sector units (PSUs) where it holds around 60 per cent stake should be brought down to 49 per cent in one go.

It is a view which seems to have been gathering ground within the panel constituted by the government for devising a disinvestment strategy. The recommendation is believed to be part of a second set of recommendations.

Officials in the know say if the Centre’s stake is lowered in one go, the PSUs would get better market capitalisation and it will also help in professional expertise, too, on their boards of directors.

The panel has been constituted under the NITI Aayog. It has been tasked by the government to identify PSUs in which the Centre can lower its stake and also those where no stake sale can happen as they are sick units. And, to frame a policy for divestment and revival of sick state-owned units.

The department of investment & public asset management (Dipam) and NITI Aayog started discussions in March to identify companies where the government could divest. Finance Minister Arun Jaitley has budgeted a divestment target of Rs 56,500 crore for 2016-17. Of this, Rs 36,000 crore is expected to come from the reduction in the Centre’s stake in listed PSUs, through stake sales and buybacks. The rest is expected from strategic sales.  

The latter involves NITI Aayog identifying PSUs in this regard, advising the government on mode of sale and suggesting methods on valuation. Also involved are the line ministries, the new Dipam and an empowered group of secretaries on disinvestment.

NITI Aayog’s, and the government’s, two-pronged approach towards revising or selling stake in PSUs comes from the top. While the Centre maintains that it will exit from sectors where the government ‘has no business being in business’, Prime Minister Narendra Modi prides himself for having revived sick PSUs when chief minister of Gujarat. He has pushed for reviving fertiliser plants in Gorakhpur, Barauni, Sindri, and Fertilisers and Chemicals, Travancore.

In a recent interview with the Wall Street Journal, he'd said: "In any developing country, both the public and private sector have a very important role to play. You can't suddenly get rid of the public sector, nor should you."

In the previous two years, the government earned Rs 57,933 crore through divestment — Rs 32,620 crore in 2014-15 and Rs 25,313 crore in 2015-16.