Government may go ahead with privatisation of ailing PSUs

IT WAS expected that finance minister Arun Jaitley might spell out some bail out package for struggling PSUs. And he did outline revival package for the ailing national carrier Air India. Jaitley announed that Air India will get Rs.2,500 crore for 2015-16. The amount was far less than a grant of Rs.4,277 crore sought by...

the aviation ministry under an ongoing turnaround plan that sees Rs.30,000 crore equity infusion every year till 2021.

At the same time sending a red signal to ailing PSUs, the finance minister hinted that it will not only sell minority stake in public sector entities but could also go for complete privatisation by roping in strategic partners wherever feasible.

He said: “It may be noted that budget reflects considerable scaling up of disinvestments figures. This would include both disinvestment in loss-making units, and some strategic disinvestment,” Jaitley said.

Earlier, the BJP-led National Democratic Alliance (NDA) government headed by Atal Behari Vajpayee also went ahead with privatisation of companies such as Hindustan Zinc and Balco.

Later Jaitley told reporters that he was not averse to the idea of strategic sale and privatisation of PSEs. “It could be considered,” he said without giving out details of which companies could be considered for strategic sale.

The government has initiated the process to sell stakes in ONGC, IOC, Nalco, REC, MOIL, Dredging Corporation, PFC and BHEL. Several of these issues may be taken up early in 2015-16 as groundwork for most have already been completed.

Earlier, the government had decided to shut down six ailing PSUs completely.

The list includes Hindustan Photo Films, HMT Bearings, HMT Chinar Watches, Tungbhadra Steel, Hindustan Cable and the iconic HMT Watches.

In the second round, 15 more loss-making firms will be under consideration, including British India Corporation, IDPL and their subsidiaries.

Government data shows there are 61 sick central public sector enterprises (CPSEs) that had 1.53 lakh employees as on March 31, 2013. The government has been paying the salaries of all these employees largely through the budget.

A committee of secretaries headed by Cabinet secretary Ajit Seth has also approved new parameters for revival of sick PSUs.

The government has also set up a committee under the NTPC chairman to explore the possibility of setting up a separate entity funded by financially strong CPSEs to look at management and revival of sick companies.