The government sets a high CPSE participation sale target of Rs 1.05 lakh cr
New Delhi, July 5 () The government will initiate the privatization of the CPSE, including Air India, as it sets a record divestment target of Rs 1.05 lakh crore that will cause the government to reduce its participation in some CPSEs to less than 51%
While the strategic sale will lead to outright privatization in some CPSEs, direct government participation may be reduced to below 51 percent, but effective control will remain in the hands of the government after considering ownership of other state entities, such as Life Insurance Corporation. .
In presenting the 2019-20 Budget, Finance Minister Nirmala Sitharaman said that the government has been following the divestment policy in non-financial public sector companies that maintain government participation not to go below 51 percent.
The government is considering, in case the commitment is not yet under government control, to go below 51 percent at an appropriate level in each case. The government has also decided to modify the current policy of retaining 51 percent of the government's participation to retain a 51 percent stake, including the participation of government-controlled institutions, he said.
The government has set a high disinvestment target of all time of Rs 1.05 lakh crore, above Rs 90,000 crore projected in the Provisional Budget 2019-20 in February.
In 2018-19, the government raised Rs 84,972 crore from the divestment of the CPSE, while in 2017-18, the figure was Rs 1,00,056 crore.
The strategic divestment of selected CPSE would continue to be a priority of this government. Given the current macroeconomic parameters, the government will not only restart Air India's strategic disinvestment process, but will offer more CPSE for the strategic participation of the private sector, said Sitharaman, adding that the consolidation of the CPSE will also continue.
Speaking to reporters after the presentation of the Budget, the minister said that the target of Rs 1.05 lakh crore is very realistic and that divestment is a reform program that should be promoted because we do not want the economy to stagnate.
We announced that the government reduced participation (below 51 percent), but there are still two or three different government agencies, in total, with more than 51 percent. We think it should be opened. The government still keeps its property. But if you open it, at least you're giving us the opportunity to let ourselves be told by small retail buyers, he said.
To improve capital flows in the Indian economy, it is important to align national corporate systems and practices with global ones, the minister.
The government intends to continue fostering retail participation in the CPSEs that, lately, have shown an upward upward trend. In order to provide additional investment space, the government would re-align its participation in CPSEs, including banks, to allow for greater availability of its shares and improve the depth of its market, said Sitharaman.
Having raised more than 45 billion rupees of exchange-traded funds in the last fiscal year, he said that exchange-traded funds have proven to be an important investment opportunity for retail investors and have proved to be a good instrument for the divestment program .
To expand this further, the government will offer an ETF investment option in the lines of the equity-linked savings plan (ELSS). This would also encourage long-term investment in CPSE, he added.
The minister will take all necessary measures to comply with the public participation rules of 25 percent of all PSUs listed, the minister said. In addition, the government will raise the limits of foreign participation to the maximum permissible limits of the sector for all PSU companies that are part of the Emerging Markets Index, said Sitharaman. JD DP HRS