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In a major policy change, the Centre has decided to go below 51 per cent shareholding in non-financial public sector undertakings (PSUs) in certain cases, but without losing control over such entities.
This can be possible if it were to club the stake of government-controlled institutions, if any, in such entities for the purpose of ascertaining control.
From its current policy of retaining at least 51 per cent of its own stake in such PSUs, the Centre will now look to retain the 51 per cent control, including the stake of government-controlled institutions.
For instance, in a PSU, the Government on its own holds 60 per cent and say LIC owns 20 per cent, then Government can look to bring down its own stake to 31 per cent and still control the entity along with LIC’s 20 per cent holding.
This change in policy is expected to give a boost to the divestment programme for non-financial PSUs this fiscal, say experts.
Finance Minister Nirmala Sitharaman announced an enhanced disinvestment target of ₹1.05 lakh crore for the current fiscal.
She also said that strategic disinvestment of select Central Public Sector Enterprises (CPSEs) would continue to remain a priority of this government.
“In view of current macro-economic parameters, government would not only re-initiate the process of strategic disinvestment of Air India, but would offer more CPSEs for strategic participation by the private sector,” she added. The government will also continue to do consolidation of PSUs in the non-financial space as well.
Will not apply to banks
Economic Affairs Secretary Subhash Chandra Garg made it clear that the latest policy modification will not apply to banks.
“The government has no plans to bring down its stake in public sector banks below 51 per cent,” he said, when asked if the latest policy tweak would apply to banks.
Sitharaman said the government intends to further encourage retail participation in CPSEs which, of late has shown very encouraging upward trend. In order to provide additional investment space, the Government would realign its holding in CPSEs, including banks to permit greater availability of its shares and to improve depth of its market.
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