Policy switch: Government’s newfound faith in PSUs
In a very unusual piece of investment advice in Parliament, the PM exhorted people to bet on PSU stocks. Taking a potshot at the opposition for their doomsday predictions on the Indian economy and public sector companies, the prime minister made an impassioned appeal to investors to show faith in Indian PSU stocks. His praise for PSUs is a departure from his government’s past stance on government-owned companies, which are largely seen as a legacy of Nehruvian socialism. That the top leadership of a government, which has time and again attacked its predecessors for failing to dispose of inefficient PSUs, is advising people to repose faith in these units, is a big statement that somehow went unnoticed in the ruckus in Parliament.
The Narendra Modi government has made a lot of song and dance about its disinvestment efforts since it came to power in 2014, but the fact remains that only two PSUs—Air India and Neelanchal Ispat Nigam Ltd—have been sold to a private player (Tata) so far. In other strategic disinvestments, the government would simply sell its entire stake in one PSU to another. And while the government can take credit for the privatisation of two PSUs, it is equally true that the privatisation agenda of the government has been locked away in cold storage for now. Power corridors are abuzz with talks that PSU disinvestment is not a priority for the government for now. Even the ones in the pipeline—IDBI Bank, BEML, Concor—look like a distant possibility.
There has been a realisation of sorts by the government that PSUs may not, after all, be that bad. Ministers in the government have been singing paeans of the PSU oil marketing companies due to their help in tiding over the serious fuel crisis in the wake of the Ukraine war last year. At the peak of the coal crisis last year, Coal India was tasked with importing coal to replenish power plant stocks. When Yes Bank was in trouble, the government asked SBI to rescue the private lender. The government sees the benefit of having PSUs in certain sectors, and its disinvestment policy will be guided by this newfound fondness for PSUs. The prime minister’s copious praise for PSUs, therefore, should not be seen as an isolated event.