THE MANTRA OF PRIVATISATION

The 2021-22 budget signals the government’s intent to disinvest like “never before”. But if that’s the new model for economic recovery, it’s easier said

- SHWWETA PUNJ, ANILESH S. MAHAJAN AND M.G. ARUN

WHEN THE NARENDRA MODI GOVERNMENT came to power in 2014, one of its more memorable slogans was ‘minimum government, maximum governance’, a pledge to reduce the size and business footprint of government. In one area, in particular, it has little to show on this count: the divestment of PSUs (public sector undertakings). Though it has regularly set ambitious revenue targets— totalling Rs 6.57 lakh crore since 2014-15—it has fallen short year after year, achieving Rs 4.04 lakh crore as of 2020-21. The figures for this past fiscal year were particularly bad, with disinvestment revenues of Rs 31,000 crore against a target of Rs 2.1 lakh crore.

Nevertheless, finance minister Nirmala Sitharaman’s 2021-22 budget reiterates this commitment. Also, given that the outlook for both economic buoyancy and tax revenues remains subdued, the government is hoping to use the proceeds of big-ticket disinvestment to bankroll the next phase of economic recovery. In this effort, the Department of Investment and Public Asset Management (DIPAM) will play a key role. Its job is to make a few hundred PSUs lined up for divestment look attractive to investors. DIPAM has its task cut out, given the government’s reliance on non-tax resources. Making a virtue of that necessity, Ajay Bhushan Pandey, finance secretary and one of the chief architects of the budget, says: “The question was whether to follow an incremental approach or make a quantum leap. This budget is about a quantum leap into the future. The plan is to monetise [public sector] assets; the government should only be a facilitator.”