The government aims to raise Rs 65,000 crore through sale of its stake in different Central Public Sector Enterprises (CPSEs). However, privatization is still going slow. Let us know what is the disinvestment plan of the government and why the disinvestment plan is going slow…
What is the disinvestment plan of the Centre?
The government, under its Public Sector Enterprises (PSE) policy, plans to open all public sector companies (PSUs) for private investment, exit completely from sectors deemed non-strategic and allow at least one PSU in those areas which he considers strategic. Several profit making companies including Bharat Petroleum Corporation of India (BPCL), Shipping Corporation of India, HLL Ltd., BEML Ltd., Projects and Development India Ltd., Ferro Scrap Nigam Ltd. are in line for privatization. The government has also set a target to sell equity through IPO, FPO or offer for sale of companies.
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Why is there delay?
The government’s disinvestment plans are getting delayed due to the COVID-19 epidemic. Strategic sales have come to a standstill in the financial year 2021-22 during the Corona epidemic. During this time, the disinvestment has also faced opposition from employees due to fear of job loss. Many state governments have also opposed privatization. State governments and state or centrally owned entities have been barred from bidding for these PSU companies.
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How important is disinvestment?
Disinvestment is essential for the government to reduce its financial burden. At the same time, it is important in the direction of increasing the value of the company to the public. Disinvestment is also seen as a way to unlock the value of under-performing assets. Thus, through the privatization of some PSUs, the Center may seek private sector investment to turn around loss-making or poorly performing companies. This, in turn, helps in further job creation. However, the government has rarely met the disinvestment targets set for the past several years, putting pressure on the government’s plans to balance the fiscal deficit.
