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Tuesday, January 25, 2022

The disinvestment process of PSUs slowed down due to COVID is back on track: DIPAM Secretary

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New Delhi: Tuhin Kant Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) said on Wednesday that the disinvestment process of the PSUs affected by the second wave of COVID is back on track and the department aims to complete the disinvestment process in several enterprises by the end of March. have to complete.

He said the mega IPO of Life Insurance Corporation of India (LIC) is expected by the end of the current financial year and the government is expecting a dividend of Rs 50,000 crore this fiscal from public sector undertakings. He emphasized that the privatization of Air India, BPCL, Shipping Corporation of India, Pawan Hans, BEML and Nilanchal Ispat Nigam Limited will be completed this year and the change in ownership and control will boost the valuation of these companies.

“The COVID pandemic really hit us badly… It is very easy to do market-linked transactions, but it is much more difficult to do strategic sales where the bidders will actually take control of the company and where there is a lot of scrutiny,” the secretary said. The process is quite difficult. The restrictions imposed on travel have been gradually removed, now our disinvestment is back on track.”

“We want to privatize Air India, BPCL, Shipping Corporation of India, Pawan Hans, BEML and Nilanchal Ispat Nigam Limited this year,” Pandey said, attending the annual session of CII via video conference. The bidders have shown considerable interest in the companies and are now in the process of scrutiny and financial bidding.

Pandey said that a second InvIT for monetization of GAIL pipelines is also in preparation. “The loophole plugging plan will not be of much help in disinvestment. Instead, we have to move forward with a reforms approach. And this reform is to bring out the real operational efficiencies of the public sector enterprises… so change in control, change in ownership will give a big boost.”

“We have seen that if we have a company listed in the market and we announce its privatization, then its shares go up immediately. This means that the market is overestimating those enterprises when they go into private hands.”

Finance Minister Nirmala Sitharaman in her budget speech in 2021-22 had announced a massive privatization agenda including two public sector banks and a general insurance company. He had said that two public sector banks and one general insurance company are proposed to be privatized in the year 2021-22. This would require legislative amendments.

At present there are four general insurance companies in the public sector. National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and United India Insurance Company Limited. Any one of these will be privatized. The government has to take a final decision on the name for disinvestment of these.

The government has set a budget target of raising Rs 1.75 lakh crore through disinvestment during the current financial year. So far, the government has raised only Rs 8,368 crore by selling stake in Axis Bank, NMDC Ltd and Housing and Urban Development Corporation.

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Bhagyashree Soni
Bhagyashree Soni is a software engineer with soft writing skills. She is a degree holder from the International School of Entrepreneurial Leadership. She has been a state-level badminton champion and chess player. A woman with a forthright attitude enjoys her writing passion as her chosen career. Writing in the context of feminism, social-cause and entreprenurship is her forte.
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