Bold Privatisation Bet

In spite of criticism and Opposition jibes, the Centre commits itself to selling most PSUs; sets ambitious disinvestment target for FY22

- DIPAK MONDAL

Finance Minister Nirmala Sitharaman reiterated the Centre’s commitment to privatise most government-owned firms barring a few in four strategic sectors, in her Budget speech.

She also announced a comprehensive asset monetisation plan by creating a National Monetisation Pipeline, under which assets such as road projects, railway freight corridors, gas and oil pilpelines etc would be put up for sale or leased to private players. The finance minister also announced plans to privatise two public sector banks and one general insurance company in 2021/22. PSUs, including Air India, BPCL, CONCOR and Shipping Corporation of India, are already up for privatisation.

Also, despite falling short of the disinvestment target of ₹2.1 lakh crore for 2020/21 (it is likely to be ₹32,000 crore for the current fiscal) partly due to the Covid-19 and the subsequent lockdown, the government has once again set an ambitious target of ₹1.75 lakh crore for 2021/22. It hopes to realise ₹75,000 crore from the sale of CPSEs and ₹1 lakh crore from the sale and disinvestment of public sector banks and financial institutions.

But, how realistic are these targets? While it is easier to sell one PSU to another, privatisation involves special efforts in convincing employees’ unions, getting the right price, etc. Any private company looking to buy these companies would look for a hard bargain.

Lofty Target?

Ever since it clocked a record ₹1 lakh crore in disinvestment proceeds in 2017/18, the government has been off target.