SunstarTV Bureau: Privatisation in India is now spreading all over India. Budget represented by Finance Minister was likely to promote Privatisation. Privatisation can be served as public purpose. The finance minister’s budget speech was unabashedly bold on strategic sale and privatisation of central public sector enterprises. The Finance Minister did state that a ‘bare minimum’ of central public sector enterprises would operate in four strategic sectors and the rest privatized, and all central public sector enterprises in non-strategic areas would be privatized.
The welcome divestment strategy makes perfect sense, policy designed as it is to better leverage private sector efficiency, provide resources for developmental purposes and generally redeploy valuable assets earning suboptimal returns.
The fact is that central public sector enterprises post modest returns on equity, over two-thirds of profits of central public sector enterprises are confined to just three sectors, petroleum, coal and power; over 150 central public sector enterprises incur huge losses amounting to Rs45,000 crore annually. The political class must reach a clear consensus on privatization and wider shareholding in public sector assets, even as central public sector enterprises step up their productivity levels with transparent board-managed corporate governance. In tandem, the Centre must reach out to central public sector enterprises trade unions and communicate that greater investment space for the private sector is for the greater good.
The disinvestment target for next fiscal, Rs1.75 lakh crore, seems daunting, but note that divestment of BPCL, Air India, Shipping Corporation of India, IDBI Bank and Container Corporation, among others, is a carry-over from this pandemic-affected fiscal, and so can well be expected to be completed soon. Two public sector banks and one public sector general insurance company will also be privatized. The Centre’s resolve to form a special purpose vehicle for unlocking asset value in CPSEs, like real estate, is sensible, as would timely closure of sick and loss-making units. Privatization serves a public purpose.