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

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 program for FY20 to an all-time high level of `1.05 lakh crore, up from `85,000 crores in FY19 and `1 lakh crore in FY18.

Besides debt-laden Air India, the Centre would come out with an 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 looking at exiting the national carrier completely (as compared to the 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 the 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 the present policy of retaining 51% government stake to retaining 51% stake inclusive of the stake of government-controlled institutions,” finance minister Nirmala Sitharaman said.

This opens up a lot of scopes 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 identified for strategic sales. “Investment space can only be created if we vacate our holding. How many promoters in the private sector hold above 50%?” Chakraborty asked, referring to the fact that many promoters control firms with stakes lower than 51%.

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source: financialexpress

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