India’s PSU Privatisation Goals for 2021

The Centre has been aggressively selling government stake in public sector companies. The privatisation process is to gain more steam in 2021, given the plans being rolled out for the country’s PSUs.

India has been aggressively selling off public companies for a while now. By the early 1990s, when the country officially began privatising public companies, the number of public sector undertakings (PSUs, state and centre) stood at about 1,600 (nearly 450 central PSUs and about 1,150 state PSUs). For a country which had four or five public companies at the start of the first plan period in 1951, this had been an impressive show. The PSUs contributed a great deal to the overall growth in the economy. 

But in the 1990s, when the LPG (liberalisation, privatisation and globalisation) wave kicked in, things started turning topsy turvy for India’s public enterprises. Today, privatisation of public undertakings is a given in India.

The Centre plans to finish stake sales in 23 PSUs soon. The Union Cabinet has already given its nod for divestment in these companies. The Modi government hopes it can complete the stake sale before 2021 ends.

Up next, season sale

Included on this year’s list, reportedly, are giants such as Life Insurance Corporation (LIC) and Bharat Petroleum Corporation Limited (BPCL), which are among the largest public companies in the country. The Department of Investment and Public Asset Management (DIPAM) has already started the disinvestment process for BPCL. 

State carrier Air India has been on the block for a while now. The five subsidiaries of Air India are also on the list. The Centre has received, reportedly, several bids for Air India and BPCL.


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Talks were also on for privatising the Industrial Development Bank of India (IDBI Bank), the Numaligarh Refinery Limited (NRL), Shipping Corporation of India (SCI), Container Corporation of India (CONCOR) and others. The Centre has sought preliminary bids for a full stake sale in the SCI. It hopes to clear the deal in 2021. 

The other central public sector enterprises nominated for disinvestment were Project and Development India, Hindustan Prefab (HPL), Engineering Project (India), Bridge and Roof Co. India, Pawan Hans, Central Electronics, and Bharat Earth Movers (BEML). Hindustan Newsprint Ltd, Scooters India Limited, Bharat Pumps and Compressors, Hindustan Fluorocarbon (HFL), Ferro Scrap Nigam, Cement Corporation of India (CCI), Nagamar Steel Plant of NMDC, and SAIL’s Alloy Steel Plant in Durgapur are also in the target list for 2020-21.

The Tehri Hydro Power Development Corporation (THDCIL), and North Eastern Electric Power Corporation Ltd (NEEPCO) will also see stake sales soon. As we speak, the NITI Aayog is preparing a fresh list of PSUs to be sold off in the next round. 

In fiscal 2020-21, India achieved only about 5 per cent of the disinvestment target of Rs 2.14 lakh crore.

The government aimed to raise Rs 1.2 lakh crore through the strategic sale route. It was expecting another Rs 90,000 crore from disinvestment of the stake in public sector banks (PSBs). But with three quarters of the year already over, the Centre has generated only Rs 12,778 crore from disinvestment so far, due to the Covid-19 pandemic which delayed the stake sale process. The government disinvested equity stakes in Hindustan Aeronautics, Bharat Dynamics, Mazagon Dock Shipbuilders, RITES, IRCTC and KIOCL LTD in 2019-20

Numbers tell a story

According to the Union government, privatisation is the only way to rejuvenate the public companies, many of whom have been making huge losses. The Public Enterprises Survey of 2018-19 says some 70 central PSUs brought in losses to the tune of about Rs 31,635 crore that fiscal. The Survey says there were 348 Central Public Sector Enterprises (CPSEs) as on March 31, 2019. Of these, only 249 were operational. While 86 CPSEs were under construction, 13 CPSEs were under closure or liquidation

The report said the total gross revenues from the operation of all CPSEs during 2018-19 stood at Rs 25,43,370 crore. It has seen a growth of 18.03 per cent when compared to the previous year when the gross revenue was Rs. 21,54,774 crore. 

Also, the total income of all CPSEs during 2018-19 stood at Rs 24,40,748 crore. It was 20.12 per cent more when compared to 2017-18’s total income of Rs 20,32,001 crore. In 2017-18, 178 profit-making CPSEs made a profit of Rs. 1,55,931crore. This saw a jump of 11.96 per cent in 2018-19 when it reached Rs 1,74,587 crore.

On the other hand, 70 loss-making CPSEs made a loss of Rs 31,635 crore in 2018-19. It was 1.69 per cent less when compared to the loss of Rs 32,180 crore in 2017-18.

Between 2014 and 2019 India saw strategic disinvestments of five PSUs — HPCL, REC, NPCC, HSCC and DCIL. The government earned Rs 52,829 crore from this. The HPCL-ONGC deal raised Rs 36,915 crore. This accounted for about 37 per cent of the total disinvestment proceeds for 2017-18.

The road ahead

The coronavirus pandemic has put pressure on the government’s coffers. This has forced the Centre to make asset monetisation and disinvestment top priorities to raise revenue. With the Atmanirbhar Bharat package, the Centre also opened up all sectors for private participation. The Centre wants to sell its stake in the public sector companies at a time when it fetches the right price.

The Union government plans to completely exit non-strategic sectors through privatisation. It is also considering strategic disinvestment as an option. The plan is to retain only a few public-sector units in strategic sectors. These include defence, banking and insurance, petroleum, steel and fertilisers.

With the slowdown of the economy, the value of the PSUs, and their revenues and profits, have gone down. While the performance of PSUs has improved in the past few months as compared to the first quarter of 2020-21, it is not as good as it was in 2019 or 2018. Also, trade unions and employees of the PSUs have been opposing privatisation. The backlash from the workers has been a major stumbling block for the move. 


Read: The importance of 2 Sept general strike


In sum, the coming months will be crucial for the government and the PSUs on the block. Not just disinvestment, but meeting the fiscal deficit will pose a challenge for the Centre. The government, however, is confident that there will be no going back on the decisions of privatisation and disinvestment.

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