Pause To Privatisation? Government Reportedly Not Keen To Bring Down PSU Stakes To Less Than 51 Per Cent

According to news reports the Union government is not likely to accept the NITI Aayog's recommendation that the government sell stakes in over 250 'non-strategic' public sector enterprises. The government however is confident of raking in Rs 1 lakh crore from disinvestment despite it's self imposed limit of holding a majority of shares in the central public sector enterprises (CPSEs).

The proposal from NITI Aayog to reduce government stakes to less than 51 per cent was made with two fold aims. First, it would help government fetch considerable revenues in what is seen as a difficult year given the oil price fluctuations and other macro economic indicators. Secondly, the NITI Aayog recommendation argued that selling significant stakes would lead to an increase in value of the stakes it would continue to hold after the initial sale.

According to Economic Times, the proposal had been made earlier this year. The think-tank feels reducing government role and an increase in professional management in private hands might even lead to better efficiency in the operation of CPSEs.

It's not clear from the reports if it was the government's overall economic worldview that reposes faith in public sector enterprises or the tact that the elections are in the horizon that lead to the NITI Aayog's plan being rejected. Government sources who seem to have spoken to the Economic Times have said that they are confident of bringing in Rs 80,000 to Rs 1,00,000 crores through privatisation.

The government's CPSE stake-sale target received a set back when the government's plan to sell 74 per cent of it's stake in Air India did not find any takers from the private sector. The government is now looking at alternate options. Apart from strategic stake sale the government is also pushing listing of CPSEs in share markets. Companies such as Garden Reach Shipbuilders & Engineers Ltd (GRSE) and Mazagaon Dock Shipbuilders Ltd are among the big companies that will be listed soon.

Also read: Why Government Is Failing With Privatisation Of Air India: A Half-Hearted Salesman Can Never Succeed