Banks, insurers part of the list as process kicks off
In her Budget Speech, Finance Minister Nirmala Sitharaman had announced privatising two public sector banks and one general insurance company in 2021-22 | Illustration: Binay Sinha
The government has kicked off its privatisation drive, with the NITI Aayog, a body headed by the prime minister, submitting its first list of about 12 public sector undertakings (PSUs) to be privatised.
The organisation has submitted the list comprising PSUs in strategic sectors, which will be considered by the Department of Investment and Public Asset Management (DIPAM), and the Core Group of Secretaries on Divestment (CGD), headed by the cabinet secretary, said a top government official.
The list includes public sector banks and insurance companies, he added.
In her Budget Speech, Finance Minister Nirmala Sitharaman had announced privatising two public sector banks and one general insurance company in 2021-22.
According to the new Public Sector Enterprise (PSE) policy for Aatmanirbhar Bharat, the NITI Aayog is mandated to recommend the names of PSUs in strategic sectors to be privatised, merged, or made subsidiaries of other PSUs.
Strategic sectors — in which the government intends to keep a “bare minimum” presence — include atomic energy, space, and defence; transport and telecommunications; power, petroleum, coal, and other minerals; and banking, insurance, and financial services.
Public sector enterprises acting as regulatory authorities, autonomous organisations, trusts, and development financing institutions such as Food Corporation of India and the Airports Authority of India have been kept out of the policy. In non-strategic sectors such as hospitality and steel, PSUs would be either privatised or closed.
Once the recommendations of the NITI Aayog are considered by the CGD, the latter will give its suggestions to the Alternative Mechanism (AM), which comprises the finance minister, the minister for administrative reforms, and the minister for roads, transport and highways.
Once approved by the AM, DIPAM will then move a proposal to obtain in-principle approval from the Cabinet Committee on Economic Affairs for strategic divestment in a PSU case by case, depending upon sectoral trends, administrative feasibility, and investors’ interest.
The list of PSUs will be its first after the ambitious drive to privatise was announced in the Budget. This would pave the way for the government to move ahead with its Rs 1.75-trillion divestment target for the next financial year.
Separately, the NITI Aayog is working on identifying assets of public sector enterprises and government departments to monetise them under the National Monetisation Pipeline.