India Pushes For Privatisation Of Three PSUs Despite Covid-19 Turmoil
India is hopeful of privatising three state-owned entities that it failed to sell last fiscal, despite the economic disruption caused by the Covid-19 pandemic.
The government plans to sell its stake in Bharat Petroleum Corporation. Ltd., Container Corporation of India Ltd., and Shipping Corporation of India Ltd. to generate revenue as market sentiment is expected to return to normalcy in about two months, a government official told BloombergQuint on the condition of anonymity.
That comes as tax collections are expected to drop in the ongoing financial year as the nationwide lockdown imposed to contain the pandemic froze all but essential economic activity, and decimated consumption in the first two months of the fiscal. While India has started reopening in phases and the government announced relief packages, the economy is expected to contract for first time in four decades.
The government has already postponed the deadline for submitting expressions of interest for divesting its stake in BPCL, India’s second-largest fuel retailer, from June 13 to July 31. If successful, it will fetch the government a chunk of its divestment target, the official said. He cited studies that petroleum consumption is set to increase as people would prefer to opt for personal vehicles than public transport as a fallout of Covid-19.
Increased interest by institutional investors in the logistics sector over the years is expected to help privatisation of Concor, he said. The shipping industry hasn’t been impacted much due to Covid-19 and sale of Shipping Corporation of India to a private buyer may not be a problem, the official said, adding its privatisation would fetch about Rs 1,500 crore.
The government set a record divestment target of Rs 2.1 lakh crore for the ongoing fiscal. Of that, about Rs 90,000 crore is expected from the listing of Life Insurance Corporation of India and stake sale in IDBI Bank Ltd. Most of the remaining Rs 1.2 lakh crore divestment will be achieved through privatisation of these three companies, the official cited earlier said.
The listing of LIC is being worked out by the Department of Financial Services as it involves changes in the law and corporatisation of the entity, the official said.