NITI Aayog submits list of 12 Public Sector Undertakings to be privatised as AI sell-off process gathers momentum.
The government has “no business to be in business”.
That oft-repeated dictum by Indian Prime Minister Narendra Modi has become even more relevant in recent days, as the government embarks on a series of bold public sector reforms and divestment of several large PSUs such as Bharat Petroleum and Air India.
Kicking off the privatisation drive last month, NITI Aayog submitted a list of 12 Public Sector Undertakings (PSUs) to be privatized – which is being reviewed by the Department of Investment and Public Asset Management (DIPAM), and the Core Group of Secretaries on Divestment (CGD), headed by the cabinet secretary.
In parallel, the government’s efforts are on to find suitable financial bids for privatisation of national carrier Air India – with the aim of wrapping up the disinvestment process in the second half of the current calendar year. The shortlisted entities might be given time till June or early July this year to furnish their financial bids, according to CNBC-TV18. Once the bids are locked, the sale of Air India will take up to another 4 months to be finalised after evaluation of the financial bids.
The Tata group and SpiceJet promoter Ajay Singh are among those reportedly in the race to bid for Air India.
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Indian Finance Minister Nirmala Sitharaman had said in her Budget speech in February that the privatisation of Air India will be completed in 2021-22 – especially since it is crucial to meeting the government’s massive disinvestment target for the next financial year. Apart from selling its 100 per cent stake in Air India and Air India Express, the government is also looking to offload its 50 per cent share in Air India Airport Services Pvt Ltd.
The list compiled by Niti Aayog comprises public sector banks (PSBs) and insurance companies and will be its first following the government's ambitious drive to privatise PSUs, clearing the way for the government to go ahead with its $240 billion disinvestment target for the next financial year.
The Modi government has indicated that the strategic sectors in which it wants to keep a "bare minimum" presence, comprise power, petroleum, coal and other minerals, atomic energy, space, defence, banking, insurance, and financial services, transport and telecommunications. It has also said that PSUs in non-strategic sectors such as steel and hospitality would be either privatised or closed.
While providing lucrative opportunities for investors in these sectors, PSUs functioning as autonomous organisations, regulatory authorities, trusts, and development financing institutions such as the Food Corporation of India and the Airports Authority of India have been kept out of the policy ambit.
The bold undertakings come at a time when the outlook is positive for India's economic growth. According to the Federation of Indian Chambers of Commerce & Industry (FICCI), business confidence in March was at a decadal high, with companies not only seeing a recovery in demand but also the potential for higher investment over the coming quarters.
As the economy prepares for a momentous journey ahead, Covid seems to have unleashed India’s appetite for reforms and demonstrate without a shred of doubt that the government indeed has no business to be in business.