PSU Stake Sales: Government To Sell ‘Whatever Is Saleable’, Says Official
As part of its disinvestment plans, government is willing to breach 51% shareholding in some PSUs, says finance ministry official.
Calling privatisation the top-most priority of the government, a senior finance ministry official said the government will sell “whatever is saleable” and is planning to breach the minimum 51 percent shareholding in select public sector undertakings.
Apart from minority stake sales, the government will also continue with strategic sales in entities like Air India, he said.
In her maiden budget on July 5, Finance Minister Nirmala Sitharaman had announced a government disinvestment target of Rs 1,05,000 crore for 2019-20, higher than the Rs 90,000-crore target set during the interim budget in February.
The mop-up from PSU stake sales assumes significance against the backdrop of last week’s corporate tax cuts, which will trim government revenue by Rs 1.45 lakh crore in the ongoing financial year. This also raises questions of whether India will be able to achieve its fiscal deficit target for 2019-20.
Offloading government stake in PSUs to less than 51 percent will require amendments to certain laws, the official cited above said on condition of anonymity. These firms will also have to move beyond the remit of oversight agencies like Central Vigilance Commission and Comptroller and Auditor General of India.
"The government is proposing/planning to bring down its equity holding below 51 percent in select central public sector enterprises," the official said. Such a move is "possible" and will require amendments to Section 241 of The Companies Act, 2013.
Privatisation, he said, is "the top-most priority" for the government for the next three-four years. "We have a strong support from the prime minister,” the official said. “With that support, I’m 100 percent sure that whatever is saleable will be sold, and whatever is not saleable also will be tried.”
While admitting there are several roadblocks to PSU stake sales, the official said the government has developed a “thick skin” now. “It is not so easy to shed a 70-year-old mindset. Those who are sitting on administrative control of PSUs don’t want their control to go. But the government is absolutely committed to privatisation.”
But there won’t be a lot of PSU firms where the government will bring down its stake to below 51 percent, the official said. The guiding principle behind such moves, if any, will be to not cede control, he added.