The finance ministry is considering to revisit the option of strategic stake sale in central public sector enterprises (CPSEs) as part of its disinvestment blue-print for the new government, a move that appears to be a throwback to policies adopted by the Atal Bihari Vajpayee-led NDA government of 1999-2004.
Strategic stake sale means the government offloads most of its stake in a PSU ? at times a complete exit, but almost always being reduced to a minority residual stake.
Finance ministry officials said they will propose to the new minister the option of strategic sale in non-core sectors, apart from the practice of sale of minority stakes of 5-10%, which the UPA government has followed. They said that if the new dispensation instructs so, certain sectors, ?where the government has no business being in business?, will be identified for strategic sale.
?Although we do not have any specific companies in mind as of now, we will propose both the alternatives (strategic stake sale and minority stake sale),? a senior finance ministry official said, adding that the proposals were also communicated to the cabinet secretariat, which has been receiving inputs from various ministries ahead of government formation on May 26.
The official said that while any non-core sectors will be identified at a later stage, some areas from which the government could exit are sectors such as cement, steel, textiles and rolling transport stock. ?Sectors like defence, energy, power and natural resources are of vital importance, and the government would like to keep its control over these areas,? the person added.
Note that prime minister designate Narendra Modi has shown his preference to professionalising PSUs, rather than sell them off. If disinvestment is resorted to, he said, that would also also be based on professional inputs.
Divestment was one of the cornerstones of the previous NDA government’s fiscal policy. Between FY2000 and FY04, the government earned R6,344 crore through strategic stake sale in CPSEs.
Officials say the policy of strategic stake sale will help meet the ambitious disinvestment target of FY15.
The ministry will also communicate to the new finance minister that it is comfortable with the FY15 disinvestment target of R51,925 crore. In the run-up to the interim budget, the disinvestment department had told Chidambaram that it could realistically achieve only R20,000 crore through minority stake sale. That view has now changed with the expectation that strategic sale may also be considered.