Will Privatization of PSUs Turn Beneficial for the Modi Government

Indian government in a bid to execute a disinvestment plan is queuing up the sale of five public sector units including major business stakes
Will Privatization of PSUs Turn Beneficial for the Modi Government
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Entrepreneur Staff
Correspondent, Entrepreneur India
2 min read

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Indian government has set up a plan to execute a disinvestment plan by selling the public sector units including major shares in giant oil venture Bharat Petroleum Corporation Limited (BPCL) and Shipping Corporation of India Also on sale will be a 31per cent stake in Container Corporation of India (Concor) along with the management control.

Selling PSUs shares and encouraging disinvestment would help Modi government to fetch around INR 78,400 Crore. This will be achieved in order to get close to the disinvestment target for the fiscal year. 

According to the ministry release, The Cabinet Committee on Economic Affairs CCEA gave in principle clearance to curb down the government share in public sector units and take it to 51 per cent, while retaining management control on case-to-case basis, taking into account the government shareholding, and the shareholding of government-controlled institution. 

Planned Benefit 

According to Economic Times, The government has planned to propose around INR 1.05 Lakh crore from disinvestment plan in the present fiscal year. It has crossed the sales of assets worth INR 1 Lakh Crore in FY18 and 80,000 Crore in FY19. In September 2019, government moved ahead to raise low amount of INR 12,359 Crore through disinvestment plan. 

Through the plan, in the current market, Government has the capability to rise about INR  63,000 Crore  after selling complete 53.3 per cent stake in BPCL and around INR 2000 Crore by offloading 63.7 per cent in Shipping Corporation of India and INR 13,400 Crore from selling 30.8 per cent of Concor.

BPCL strategic sale would not include the stake of 61.7 per cent which the company holds in Numaligarh Refinery Ltd. This stake  will be provided to the public sector oil and gas unit. 

ET report says that Shares of the three companies had risen on the BSE today. Shipping Corporation went up 9.3 per cent to INR 68.35, BPCL advanced 4.9 per cent to INR 544.65 and Concor was up 1.79 per cent to INR 578.

According to the Finance Minister Nirmala Sitharaman, After the reduction and completion of the whole process, government’s control will remain intact and, while retaining the management control, on a case-to-case basis decision will be taken

 

Also Read: What PM Modi's Saudi Arabia Visit Holds for Indo-Saudi Business in India

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