PSUs to monetise idle assets; disinvestment dept renamed

By: | Published: February 29, 2016 5:38 PM

Reflecting a new approach on PSUs, government today said it will encourage them to monetise idle assets for funding investments, while renaming the Department of Disinvestment as the Department of Investment and Public Asset Management (DIPAM).

Budget 2016Reflecting a new approach on PSUs, government today said it will encourage them to monetise idle assets for funding investments, while renaming the Department of Disinvestment as the Department of Investment and Public Asset Management (DIPAM). (PTI)

Reflecting a new approach on PSUs, government today said it will encourage them to monetise idle assets for funding investments, while renaming the Department of Disinvestment as the Department of Investment and Public Asset Management (DIPAM).

Presenting the Budget for 2016-17, Finance Minister Arun Jaitley also said that NITI Aayog will identify state-owned companies that would be eligible for strategic sale.

He said the government will leverage the assets of CPSEs for generation of resources for investment in new projects.

“Change in the name of the department clearly underlines the new approach of the government. It is committed to efficient management and leveraging its investment in the CPSEs for expansion of economic activities as well as attracting fresh investments,” Disinvestment Secretary Neeraj Gupta told PTI.

He further said that the government will adopt a comprehensive investment management strategy, not limited merely to disinvestments in equity to augment resources.

“It will require policy synergy in various inter-linked issues, such as leverage ratio, capital restructuring, financial restructuring for revival, CAPEX, dividend, bonus share, resource augmentation through disinvestment of equity and assets etc,” Gupta said.

In his Budget speech, Jaitley said: “We will encourage CPSEs to divest individual assets like land, manufacturing unit to release their asset value for making investments in new projects.

“We will adopt a comprehensive approach for efficient management of the government investment in CPSEs by addressing issued such as capital restructuring, dividend, bonus shares.”

The government will soon come out with a comprehensive policy for strategic stake sale that will detail the mode as well as valuation methodology for outright sale of even profit making companies.

The government aims to collect Rs 56,500 crore through disinvestment in PSUs in the next fiscal, 2016-17.

Of the total budgeted proceeds, Rs 36,000 crore is estimated to come from minority stake sale in PSUs, and the remaining Rs 20,500 crore is projected to come from strategic sale in both profit and loss-making companies.

As regards the current year, the government has been able to meet less than half the budget estimates at Rs 25,312 crore as against the target of Rs 69,500 crore. The previous NDA government led by Atal Bihari Vajpayee had between 1999 and 2004 privatised about a dozen state-owned firms and hotels including Videsh Sanchar Nigam Ltd (VSNL), Bharat Aluminium Company Ltd (BALCO), CMC Ltd and Hindustan Zinc (HZL).

The policy however was buried after the UPA came to power and only minority stake sales was pursued since then.

The government is now looking at reviving the policy.

In the Budget for 2015-16, Jaitley had said the government will raise Rs 28,500 crore by way of strategic stake sale.

But with no specific policy detailing how to select a PSU for strategic stake sale, methodology for valuation and the process to be followed, the disinvestment department could not go ahead with selling any PSU so far this fiscal.

The vacuum is being sought to be filled with a comprehensive policy.

Also, the policy would cover both profit and loss making CPSEs, much on the lines of the report of two Disinvestment Commissions which had submitted their reports in the previous NDA regime.

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