Budget 2022-23: Non-strategic PSU privatisation may see a push next year

The government may put several public sector undertakings (PSUs) in non-strategic sectors on the block next year as it plans to continue with its privatisation push, said officials in the know.

As the new Public Sector Enterprises (PSE) policy clearly states the government’s intent of exiting non-strategic sectors that include steel, hospitality, tourism, urban development, health care, among others — either by privatisation or closure — some PSUs in these sectors are expected to attract private participants’ interest, an

official said.

A new committee has also been formed under the chairmanship of NITI Aayog CEO Amitabh Kant to help identify non-strategic PSUs for privatisation so that the process can be hastened, he added.

The government is likely to provide a road map for privatisation of such PSUs in the Union Budget 2022-23. There have been about 50 public sector enterprises that have already been identified in both strategic and non-strategic sectors by the NITI Aayog for privatisation, the official said.

The Centre has recently constituted a Committee of Group of Officers (CGO), chaired by the NITI Aayog CEO, that will help the Department of Public Enterprises (DPE) in identification of PSUs in non-strategic sectors for privatisation and closure. The CGO will include DPE Secretary Ali Rizvi, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey, Department of Economic Affairs Secretary Ajay Seth, and Secretary of concerned administrative ministry, as members.

Last month, the government had tweaked the process. The DPE — that has been brought under the Ministry of Finance — is now tasked with identifying non-strategic PSUs for privatisation. This is a change from privatisation in strategic sectors where NITI Aayog identifies candidates and DIPAM takes approval from a Cabinet Secretary-headed panel for the same before.

After identification of PSUs, the DPE prepares a note for in-principle approval of the Cabinet Committee on Economic Affairs for the same. These will be prepared separately for individual sectors falling under the category of “non-strategic sector” in the new PSE policy.

The change in the privatisation process has been done to fast-track approvals as the divestment process is time consuming and market driven. The government has also announced that its focus now would be privatisation, and minority stake sales will take a backseat.

Although privatising these non-strategic PSUs may help the government garner divestment receipts, the Centre will have to be realistic in setting the target for the next fiscal year.

Planned privatisation of BPCL is not likely to be completed this year, and sale of Shipping Corporation of India, announced in 2019, is witnessing delays and may spill over to next year.

Up For Sale

• Privatisation of non-strategic PSUs seen attracting high private participation
• New committee formed to hasten the privatisation process
• PSE policy was tweaked last month to push privatisation of non-strategic PSUs
• Govt has said its focus would be privatisation, with minority stake sales taking a back seat