Government should go ahead and sell off non strategic psus
The government appears to be unlikely to push ahead with its divestment plan in the current fiscal due to a choppy market and the comfortable revenue position. It shows complacency and defeats the goal of boosting the performance of state-owned enterprises. The government must proactively sell shares of profit-making state-owned companies that are not strategic any more. The stake sales need not have to wait for the right level of stock prices. Large-scale disinvestment in these PSUs will help shore up their performance. The case for the government to exit sectors such as steel and power is compelling, given that the private sector has developed technical and managerial capability to operate in these areas.
The government should foray into new sectors — advanced manufacturing in microelectronics, aerospace, telecom and new-generation drugs — where the private sector does not have the requisite expertise and capability. A dynamic approach is needed for the government to create companies that get into serious R&D, akin to state-owned CDoT that showed promise to boost indigenous telecom R&D. It should also swiftly wind up loss making companies and use the money garnered through reshuffling assets as capital investment to build infrastructure that the country badly needs.
Of the budgeted target of Rs 56,500 crore this fiscal year, the government has so far raised about Rs 21,432 crore through share buyback in companies that include Coal India, Nalco, HCL, NHPC, NMDC and BEL, apart from Rs 2,096 crore as part-sale of its holding in Specified Undertaking of the UTI (SUUTI). Three-fourths of the amount has been raised by buybacks, which preclude some public holding in these companies, generating some additional pressure to perform and be transparent.
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