Budget 2021: India Accelerates for privatization

The government has moderated its divestment target for financial year 2021-22, after having set a lofty target in the previous year and missed it. The central government aims to garner Rs 1.75 lakh crore through divestments in 2021-22, according to Union Budget documents. In FY21, the government had budgeted to raise Rs 2.1 lakh crore through divestments but fell short. According to the Departm

Department of Investment and Public Asset Management, the government has raised only Rs 19,499 crore so far in FY21 from asset sales in public sector firms.

Some of the big-ticket divestments planned last year, such an initial public offering of Life Insurance Corp. of India, will conclude this year, helping the government raise resources, Finance Minister Nirmala Sitharaman said in her budget speech. Other sales which will be completed this year are Bharat Petroleum Corp., Shipping Corporation of India, Clearing Corporation of India Ltd., BEML Ltd.

Pawan Hans Ltd., among others, the minister said. The finance minister also said apart from IDBI Bank Ltd., the divestment of two other state-run lenders and one general insurer has been proposed in FY22. She didn’t specify the name of the companies.

In addition, the government has approved a new public sector enterprises policy, which is intended to drive privatisation. As part of that policy, the government is identifying strategic sectors, where it will retain a maximum of four public sector enterprises. In other sectors, it will steadily privatise government units.

To fast-track divestment, the finance minister has asked Niti Aayog to identify CPSEs that would be taken up for strategic divestment. The government will also work out an incentive package to nudge states to divest their public firms.

The finance minister also proposed setting up a special purpose vehicle to sell off land assets owned by various ministries and departments, Sitharaman said. “Idle assets will not contribute to Atmanirbhar Bharat. The non-core assets largely consist of surplus land with government ministries, departments and public sector enterprises. Monetising of land can be by direct sale.