Central public sector enterprises (CPSEs) will now be denied budgetary support while their staff will lose on their performance-linked pay, if these firms fail in meeting the goals of monetising their assets. The Department of Investment and Public Asset Management (DIPAM) has issued guidelines which said state-run companies will have 12 months to monetise non-core assets identified by a ministerial panel headed by the finance minister, without having to forgo Budget funds.
DIPAM also included asset monetisation as one of the targets in the customary MoUs that the CPSEs sign with the Department of Public Enterprises (DPE). This means that a slippage in the performance on this count could result in a firm’s rating downgrade and consequent reduction in variable pay of its staff. Currently, performance-related pay can be as high as 150% of basic pay for CMDs while it is 40% for the lowest grade officers if the rating of the PSU performance is ‘excellent’.
A downgrade would bring down MoU rating from ‘excellent’ to ‘very good’ and ‘very good’ to ‘good’, resulting in reduction from 100% eligibility of performance-linked pay to 80% and 60%, respectively.
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“The Department of Expenditure and Department of Economic Affairs may consider any proposal from the CPSE/administrative ministry for budgetary support only after looking at the achievement of asset monetisation target by the CPSE. Performance of contract management will be considered before sanctioning any government budgetary support,” the DIPAM said.
The assets to be monetised by PSUs include land and buildings, brown-field operational assets such as pipelines (like that of GAIL), roads (NHAI) and mobile towers (MTNL/BSNL). It would also include financial assets like equity shares, debt securities and other hybrid instruments that are in the possession of the CPSEs.
While the Centre would retain 100% of the proceeds from monetisation of non-core assets of units identified for strategic sale and enemy properties, it could share a large chunk of the proceeds with CPSEs in case operational assets are monetised. The proceeds to the Centre from asset monetisation would be counted as disinvestment receipts, which so far only included receipts from equity sales in CPSEs and other entities.
The asset monetisation policy could also be tapped to use defence land for commercial purposes like in the US and Canada. The new asset monetisation policy was announced in the interim budget for 2019-20.