STOCK MARKET BSE NSE

PSUs in non-strategic sectors to be privatised

According to Sitharaman, the government will soon announce a new PSU policy, which will focus on privatising PSUs in non-strategic sectors based on feasibility.

Published: 18th May 2020 10:18 AM  |   Last Updated: 18th May 2020 10:20 AM   |  A+A-

Union Finance Minister Nirmala Sitharaman addresses a press conference to announce the fifth and final tranche of economic stimulus package at the National Media Centre in New Delhi on Sunday.

Union Finance Minister Nirmala Sitharaman addresses a press conference to announce the fifth and final tranche of economic stimulus package at the National Media Centre in New Delhi on Sunday. (Photo | Anil Shakya, EPS)

By Express News Service

NEW DELHI: Union Finance Minister Nirmala Sitharaman on Sunday announced major reforms for Public Sector Undertakings (PSU), as a result of which many sectors are likely to see large-scale consolidation and divestment of State-run firms.

According to Sitharaman, the government will soon announce a new PSU policy, which will focus on privatising PSUs in non-strategic sectors based on feasibility. The policy will, in parallel, specify certain strategic sectors in which the “presence of PSEs in public interest” will be mandatory.

“In strategic sectors, at least one enterprise will remain in the public sector, but private sector will also be allowed. In other sectors, PSEs will be privatised (timing to be based on feasibility etc),” said the finance ministry. It also added that in order to minimise wasteful administrative costs, the “number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised (or) merged (or) brought under holding companies”.

The announcement was part of the final tranche of announcements in the Atma Nirbhar Bharat Abhiyan stimulus package, which the government claims will provide stimulus worth around 10 per cent of GDP.
The FM said there was a need for a “coherent policy, because sometimes you open up some sectors piecemeal. Now we shall define these areas... where PSU presence will be impactfully felt”.

Analysts say that the move is a welcome announcement, because it will open up certain markets to more private competition and consolidate the sprawling network of numerous PSUs. But, how soon such an initiative can be mobilised will play a role in its effectiveness. “If this bold announcement is quickly transmitted into action, then it could unlock a lot of value,” said Dhiraj Relli, MD & CEO, HDFC Securities.

Sumit Khanna, partner, Deloitte India, also noted that the identification and notification of strategic sectors with limited PSU representation “puts definition to the government’s privatisation strategy”.

While successful privatisation will result in an influx of funds into a cash-starved exchequer, analysts note that many PSUs may not attract sufficient investor interest due to the impact the pandemic has had on the economy.


Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

IPL_2020
flipboard facebook twitter whatsapp