To lead to better efficiency, faster expansion and job creation
Private sector brings with itself global best practices, (which leads to) modernisation and aids the relevant sector to expand at a faster pace and create more jobs,” he said.
Prime Minister Narendra Modi on Wednesday strongly pitched for a transparent, monitored and continuous process to privatise assorted government assets – companies, their physical assets and other state-owned infrastructure –, in the most unequivocal assertion of a much-awaited policy shift by any head of government since Independence. “The government is moving ahead with a resolution to monetise and modernise. When the government monetises, the space is filled by the private sector. Private sector brings with itself global best practices, (which leads to) modernisation and aids the relevant sector to expand at a faster pace and create more jobs,” he said.
Reaffirming the government’s commitment to exit from most businesses, Modi urged investors to lap up the opportunities being offered by monetisation of assets worth Rs 2.5 lakh crore over the medium term and its drive to privatise most of the state-owned companies in the coming years under a new policy.
In a webinar on privatisation and asset monetisation attended by the leading policymakers in the government, including finance minister Nirmala Sitharaman and industry heavyweights, Modi iterated: “To make every enterprise efficient (through management change enabled by privatisation), there is now a strong political will. The process will be marked by transparency, accountability, rule of law and Parliamentary oversight.”
The prime minister also stressed that it was the responsibility of the government to give full support to enterprises and businesses. “But there is no need for the government itself to run businesses and remain the owner (of companies).The government has no business to remain in business,” he said.
The resources raised through asset monetisation or privatisation will be used for welfare of people and development programmes, such providing drinking water, building houses for the poor, rural roads, sanitation, etc, he said.
He said the instead of an annual disinvestment plan, the government has embarked on a medium term strategic approach on disinvestment.A clear road map for investments would be drafted. This would create new investment opportunities and immense employment opportunities in every sector., he said.
Modi asked to investors to take advantage of the National Asset Monetisation Pipeline (NAMP) of 100 assets announced in the Budget FY22.
Stating that bureaucrats are trained for running welfare-development programmes, the prime minister said when the government tries to run businesses, it leads to losses due to deficit in taking responsibility.
The prime minister said the government is moving in the direction of privatisation with full commitment, with equally high priority on the implementation of these policies. He also said that to ensure transparency and our procedures are correct to ensure competition, it is very important to have a stable policy.
In the Budget, Sitharman announced NAMP of potential brownfield infrastructure assets such as five operational roads with an estimated enterprise value of Rs 5,000 crore are being transferred to the NHAI InvIT. Similarily, transmission assets of a value of Rs 7,000 crore will be transferred to the PGCIL InvIT.
Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning. The next lot of Airports will be monetised for operations and management concession.
Other core infrastructure assets that will be rolled out for monetisation include NHAI’s Operational Toll Roads, transmission assets of PGCIL, oil and gas Pipelines of GAIL, IOCL and HPCL, AAI Airports in Tier II and III cities, Other railway infrastructure assets and warehousing assets of CPSEs such as Central Warehousing Corporation and NAFED and sports stadiums are to be sold too.
The Budget has also unveiled the new strategic disinvestment policy, under which four broad sectors are classified as strategic in which at least one PSU to be retained while the remaining ones can be privatised or merged or closed. These four sectors are: atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; banking, insurance and financial services. In non-strategic sector, CPSEs will be privatised or closed. The new policy will release a large number of PSUs for privatisation in the coming years, potentially boosting the Centre’s non-debt capital receipts for various social sector and developmental programmes. Already, the government is in the process of privatisation of fuel-refiner-cum refiner BPCL and national carrier Air India.
The Centre has projected a conservative disinvestment revenue target of Rs 1.75 lakh crore for FY22 even though bulk of the deals planned in FY21 such as strategic sale of fuel retailer-cum-refiner BPCL and the initial public offer of Life Insurance Corporation are seen materialising next fiscal. With Covid-19 pandemic playing spoilsport, FY21 disinvestment revenues (revised estimate) will be at a five-year low of around Rs 32,000 crore or 14% of the massive annual target of Rs 2.1 lakh crore.