Armed with a stronger political mandate and without the necessity of support from anti-disinvestment Left Front, the new government is planning to kickstart the stalled programme of shedding stakes in central public sector undertakings.
Officials, who did not wish to be identified, confirmed that a comprehensive disinvestment policy articulating the need for companies to raise capital without affecting the shareholding pattern of majority government-ownership was in the works.
There are 214 functioning PSUs under the Centre’s control, of which only 160 are profit making while the remaining 54 are in the red. Among the 160 profit-making firms, only 99 have a positive net worth, while 48 firms have negative net worth despite being profitable.
Officials said about half of these 99 positive net-worth profit making companies require capital for expansion and to stay competitive and the fiscally strapped government should not spend budgetary resources on them.
“There is a need to have a clearly articulated policy and have a wider debate on the issue. If a company needs to raise capital, then there is no harm in letting it go to the capital market,” Disinvestment Secretary Rahul Khullar told Hindustan Times.
Officials say public listing helps PSUs boost efficiency.
“Public shareholding of companies give incentives, which mimic private incentives. This would raise operational efficiency manifold,” Kullar said but declined to comment on whether a schedule was being drafted for disinvestments.
Another official, who did not wish to be identified, however, said the disinvestment programme could well get underway in the next few months. Some PSUs do not have enough cash to effect pay increases recommended by the Justice Jagannadha Rao panel, while a profitable shipping company does not have enough capital to service its healthy order-book.
“What is the harm in allowing this company to raise capital from the market through fresh equity? The government can piggyback on the IPO by offloading a minority stake,” the official said, without naming the firm.