Category: PSU reforms & dis-investment

Unshackle disinvestment

Even as the current financial comes to an end in just about two months, the Government has so far realized less than Rs 10,000 crore as proceeds of disinvestment from Central Public Sector Undertakings (CPSUs) against a target of Rs 175,000 crore set by the Finance Minister Nirmala Sitharaman in the Union Budget for 2021-22. Even after adding around Rs 100,000 crore being the expected proceeds from sale of its 10 percent shares in Life Insurance Corporation of India or LIC (on the premise that it goes through before the year-end), then also, there will be a whopping shortfall of Rs 65,000 crore. This is not new. It is a continuation of a trend seen during the previous six years under...
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The Air India sale : Better late than never

Persistent neglect of Air India for over a decade and even during the period when its sale was under consideration has cost the exchequer dear On June 28, 2017, the then Finance Minister, the late Arun Jaitely, had announced the ‘in-principle’ decision of the Union Cabinet for strategic divestment of Air India (AI) and five of its subsidiaries. Over 50 months there after, on September 8, 2021, the Government has informed about its decision to privatise AI and its 100 percent subsidiary, Air India Express Limited (AIEL) and its 51 percent share in Air India Air Transport Services Limited (AIATSL). The iconic Maharajahas gone back to the hangar of the Tata Group almost 68 years after the company was nationalized...
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Air India sale – better late than never

On June 28, 2017, the then Finance Minister, Arun Jaitely had announced the ‘in-principle’ decision of the Union Cabinet for strategic divestment of Air India (AI) and five of its subsidiaries. Over 50 months thereafter, on September 8, 2021, the Government has informed about it decision to privatize AI and its 100 percent subsidiary namely Air India Express Limited (AIEL) and its 51 percent share in Air India Air Transport Services Limited (AIATSL). The iconic Maharaja – as the airlines is nicknamed – has gone back to the hangar of Tata Group almost 68 years after the company was nationalized in 1953. The AI privatization saga reveals four major pitfalls. First, the move has been half hearted from the day one. This...
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Bank NPAs — the inevitable monster

A loan taken with the sole intention of siphoning off funds for personal gains is bound to irreversibly damage the bank’s image According to a statement by the Minister of State for Finance, Bhagwat K Karad, in Parliament, non-performing assets (NPAs) or bad loans of banks declined from a high of around Rs 1036,000 crore as on March 31, 2018, to Rs 896,000 crore on March 31, 2020, and further down to Rs 834,000 crore on March 31, 2021. The choice of March 31, 2018 has special significance. Under the UPA, particularly during its second tenure 2009-2014, banks recklessly gave loans to corporate houses and businesses without assessing the viability of the projects and conducting due diligence. The ability of...
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What’s ailing PSUs’ sale?

The PM will do well to ‘debureaucratise’ the process of running CPSUs. This should be done even before privatisation is taken up The process of disinvestment needs to be unshackled. Against the `210,000 crore target set for disinvestment proceeds from Central Public Sector Undertakings (CPSUs) in FY21, the actual realisation was just about `32,000 crore. Even as the Centre may explain it away as ‘corona pandemic effect’, the prospects in FY22, when the economy is expected to register high growth, don’t seem much better. For this year, the target for speaks for itself. Finance minister Nirmala Sitharaman has fixed the target for FY22 at `175,000 crore, substantially lower than year before. This is despite adding two public sector banks (PSBs)...
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CPSU privatisation an uphill task

The Centre should de-bureaucratise the process of running PSUs. This should be done even before privatisation is taken up Under a big bang approach to privatisation announced in the Union Budget, Finance Minister Nirmala Sitharaman has divided the Central Public Sector Undertakings (CPSUs) in two broad categories i.e. strategic and non-strategic. Whereas the former is broken up into four subgroups: Atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; banking, insurance and financial services, the latter includes all other sectors such as hotel and tourist services, industrial and consumer goods, trading, marketing and so on. As per the plan, all PSUs in non-strategic sectors will be privatised and all loss-making enterprises in this category will be closed....
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Privatization – An uphill task

Under a big bang approach to privatization announced in the Union Budget for 2021-22, the Finance Minister, Nirmala Sitharaman has divided the Central Public Sector Undertakings (CPSUs) in two broad categories viz. “strategic” and “non-strategic”. Whereas, the former is broken up into 4 sub-groups viz. atomic energy, space and defense; transport and telecommunications; power, petroleum, coal and other minerals; banking, insurance and financial services, the latter includes all other sectors such as hotel and tourist services, industrial and consumer goods, trading and marketing and so on. As per the plan, all PSUs in non-strategic sector will be privatized. All loss making enterprises in this category will be closed. In the strategic sector too, the Government will be open to privatization...
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Stop chasing a mirage

The Govt needs to pursue disinvestment, including privatisation, as an objective by itself instead of linking it to revenue receipts and meeting the fiscal target The Department of Investment and Public Asset Management (DIPAM) is in a war of words with the Ministry of Finance (MoF) over the proceeds of disinvestment of the Government’s shareholding in Central Public Sector Undertakings (CPSUs) during 2020-21. The point raised by the DIPAM is that out of the Rs 2,10,000 crore target fixed in the Union Budget, a big slice of Rs 90,000 crore, was thrust upon it by the MoF as being the projected proceeds from the sale of 10 per cent shares in the Life Insurance Corporation (LIC) and its residual stake...
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Disinvestment – chasing a mirage

Reportedly, the Department of Investment and Public Asset Management (DIPAM) which deals with all matters relating to management of Union Government investments in equity including disinvestment of its shareholding in Central Public Sector Undertakings (CPSUs) is in a war of words with the Ministry of Finance (MoF) over the target of proceeds of disinvestment during the current financial year (FY) i.e. 2020-21. In the Union Budget for 2020-21 presented on February 1, 2020,  the Finance Minister, Nirmala Sitharaman had set the target at Rs 210,000 crore – a steep increase over the revised estimate (RE) for FY 2019-20 at Rs 65,000 crore (the actual for that year was even lower at about Rs 50,000 crore). The point raised by DIPAM...
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Don’t squeeze PSUs

The Govt should collect money from all those who owe it instead of squeezing CPSEs for bridging fiscal gaps. This is neither healthy for the economy nor good for the enterprises The Department of Investment and Public Asset Management (Dipam) has come out with a circular requiring Central Public Sector Enterprises (CPSEs) to pay interim dividend every quarter or half-yearly, depending on whether it is a relatively higher dividend (100 per cent or Rs 10 on a share of Rs 10) or less. Even those which can’t pay the prescribed “minimum” must give an interim dividend. Further, at least 90 per cent of the projected annual dividend should be paid as interim. Even as the bureaucrats justify this in terms...
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