Ministerial panel set to take up PSU insurer's privatisation soon

A ministerial panel will soon take up the privatisation plan of a state-owned insurer as the Core Group of Secretaries on Divestment (CGD) is learned to have not raised any objections on the NITI Aayog’s proposal.
 
Consultations at the CGD level involved deliberations on the process of privatisation, timing, and the way forward to sell the PSU insurer — United India Insurance — suggested by NITI Aayog, said an official. The CGD did not raise any issue that could deter the privatisation process, he added.
 
The Alternative Mechanism — which includes Finance Minister Nirmala Sitharaman and Road, Transport, and Highways Minister Nitin Gadkari, among others — will now initiate yet another series of consultations with NITI Aayog and the Department of Investment and Public Asset Management (DIPAM), before taking the final decision.
 
“There is expected to be extensive consultations by the ministers’ panel on both the finalisation of the PSU insurer for privatisation as well as the process,” the official said. In the ongoing session of the Parliament, the government has approved changes to General Insurance Business (Nationalisation) Act that removed a clause that mandated that the Centre hold at least 51 per cent in public sector insurance companies at any given time, and allowed transfer of management control to a potential buyer.

The process of approving the right candidate for privatisation will be undertaken by the ministerial panel so that the government can privatise one insurer in the current financial year as announced in the Union Budget.
 
Once approved by the panel of ministers, the proposal will be placed before the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi.
 
The DIPAM will then begin a market analysis, and will appoint intermediaries to arrive at the valuation of the company. As the government has already increased foreign direct investment (FDI) limit in the insurance sector to 74 per cent, overseas investors can also pick up stake in a government-owned insurer up to that ceiling. The sentiment in the insurance sector is positive, said the official quoted above.
 
Insurance has been classified as one of the strategic sectors in the new Public Sector Enterprises policy for Aatmanirbhar Bharat, where the government intends to retain a “bare minimum” presence of state-owned companies.