India Markets open in 3 hrs 59 mins

PSU disinvestment: Time for big and small strategic sales, says DIPAM secretary Atanu Chakraborty

Prasanta Sahu
Disinvestment, indian psu, psu india, Govt, insurer, New India Assurance, DIPAM, DFS, HPCL, investors, Centre, rejig, ETF baskets, markets news, L&T, NMDC, indian rupee, indian bonds, bond market, bonds, rupee, narendra modi,

The government will carry out a number of 'big and small' strategic sales of PSUs in the current financial year, while also bringing down stakes in many other PSUs to below 51%, Department of Investment and Public Asset Management (DIPAM) secretary Atanu Chakraborty told FE.

"The number of deals will increase this year…we want elephants (under-performers which are large in size) to fall in line (for disinvestment)," Chakraborty said, adding that the government was in the process of identifying more companies for strategic disinvestment.

With tax receipts slowing down, the Centre scaled up its disinvestment programme for FY20 to all-time high level of `1.05 lakh crore, up from `85,000 crore in FY19 and `1 lakh crore in FY18.

Besides debt-laden Air India, the Centre would come out with expression of interest (EoI) in a week or so for a bunch of PSUs, including BEML, Engineering and Projects India and Pawan Hans. The government will shortly invite EoI from prospective buyers for Air India with an objective to conclude the transaction by October-November. The Centre is open to look at exiting the national carrier completely (as compared to earlier plan of retaining 24%), the official said.

"The government has given us (DIPAM) freedom to add more companies for strategic disinvestment…we will add more," Chakraborty said.

The government has been following the policy of disinvestment in non-financial public sector undertakings maintaining that the Centre’s stake not to go below 51%. The Budget for FY20 proposes to change that policy. "The government is considering, in case where the undertaking is still to be retained in government control, to go below 51% to an appropriate level on case to case basis. It has also decided to modify present policy of retaining 51% government stake to retaining 51% stake inclusive of the stake of government-controlled institutions," finance finister Nirmala Sitharaman said.

READ ALSO | Income Tax Calculator: Know post-Budget 2019 Income Tax out go here

This open up a lot of scope for the Centre to sell minority stakes via the exchange traded fund (ETFs), which contributed a record Rs 45,080 crore or 53% of the disinvestment receipts in FY19.

Chakraborty said the government can bring down gradually its stake in many companies to below 51%, before selling the residual stake in PSUs which are not identifies for strategic sales. "Investment space can only be created if we vacate our holding. How many promoters in private sector hold above 50%?" Chakraborty asked, referring to the fact that many promoters control firms with stakes lower than 51%.