More reports on: PRE-BUDGET REPORTS

Budget 2016 likely to revive `strategic sale' policy

news
11 February 2016

The central government is likely to revisit the strategic sale route for sale of stake in state-owned enterprises as the budgeted programme of divestment has failed to meet target in seven successive years.

The upcoming budget (2016-17) is expected to announce a clear-cut policy in this regard, reports quoting official sources said.

While the 2015-16 budget too had proposed ''strategic sale'' of government stake and had set a target of Rs28,500 crore for the fiscal, neither the routine divestment target nor the target for strategic sale could be achieved.  Against a divestment target of Rs69,500 crore, actual sale of stake was worth Rs13,300 crore.

And, with the market in the doldrums, there isn't any chance of the government making any further divestments, not to speak of achieving the target, this fiscal.

Reports say, the government is preparing a roadmap for such strategic sale of stake and the coming budget will spell out a clear-cut policy framework for such divestment.

The department of disinvestment is formalising a policy prescription and a mechanism on selection of entities and the mode of execution of the strategic sales, reports said, adding that the government is also expected to clarify which sectors it wants to be in and from where to opt out.

The coming budget is expected to clearly state the government's policy and even the timelines for a massive privatisation process, according to reports.

Alternatively, the government could encourage cash-rich PSUs to pick up small stakes to be divested by the government in other PSUs, thereby also helping to enhance cross-holding among state-run firms.

The government has asked about a dozen cash-rich PSUs, such as Coal India, Nalco, NMDC, Power Finance Corporation and Rural Electrification Corporation, to get their board approval for picking up government stakes in other PSUs to augment disinvestment revenue.

The government may also set up a panel similar to the former Disinvestment Commission (1996-2004).

Reports said the government has identified eight loss-making ITDC hotels, including the ones in Bhubaneswar, Puri, Jaipur, Jammu, Guwahati, Ranchi, Puducherry and the Lalitha Mahal hotel in Mysuru, for privatisation. Other sick companies that could be sold off include Scooters India, Tyre Corporation of India, HMT Bearings, HMT and Richardson & Cruddas.

Meanwhile, a group of secretaries set up to advise the government on divestment priorities, is reported to have suggested that the government should divest from sectors such as airlines, hotels and travel agencies.

Besides a network of hotels, ITDC also runs transport units, and nine duty-free shops at airports and seaports. The administrative ministries have also been asked to identify potential companies under them for possible sell-off.





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