Union Cabinet approves a new process of strategic disinvestment

The Cabinet has approved a new process of strategic disinvestment with a view to expediting privatisation of select PSUs, officials said on Friday.

The Union Cabinet headed by Prime Minister Narendra Modi at its meeting on Thursday evening approved the new policy under which the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance has been made the nodal department for the strategic stake sale.

This was done with a view to streamlining and speeding up the process, reducing the role of administrative ministries which often used to place hurdles in the path of major stake sales, officials said.

While presently PSUs for strategic sale are identified by NITI Aayog, the tweak in policy has now brought DIPAM into the picture. DIPAM and NITI Aayog will now jointly identify PSUs for strategic disinvestment, they said.

Also, DIPAM secretary would now co-chair the inter-minister group on disinvestment, along with the secretary of administrative ministries concerned.

The change comes within a week of a group of secretaries agreeing for sale of government's entire 53.29 per cent stake in Bharat Petroleum Corp Ltd and its 63.75 per cent stake in Shipping Corporation of India (SCI), 30 per cent in Concor, 100 per cent NEEPCO and 75 per cent in THDC.

Officials said strategic sale may involve two-stage bidding beginning with an expression of interest (EoI) or a preliminary intent showing bid, and a final financial bid. Pre-bid meetings with likely bidders and roadshows to attract potential investors will form part of the process to provide clarity on every aspect of the stake sale.

Also, data centre will be set up for bidders to look for information on the PSUs up for sale, they added.

Officials said the idea is to complete the stake sale within a timeframe, say 4-5 months.

The government has set a target of mobalising Rs 1.05 lakh crore from disinvestment proceeds and achieving this has become more critical after it doled out Rs 1.45 lakh crore stimulus by way of a cut in corporate tax.

Disinvestment proceeds will be critical for the government to stick to its target of keeping fiscal deficit at 3.3 per cent of the GDP in the current fiscal year ending March 31, 2020.