Decoding Budget: Disinvestment goal of Rs.1.75 lakh crore means govt will go on massive privatization drive

Union Finance Minister Nirmala Sitharaman has announced Rs.1.75 lakh crore as disinvestment target for Fiscal Year 2021-22, which means that the Modi government will start a massive privatization drive of Public Sector Units (PSUs) and Central Public Sector Enterprises (CPSE).

Presenting the Budget, Sitharaman declared, “The government has approved the said policy. The policy provides a clear roadmap for disinvestment in all strategic and non-strategic sectors. We have kept 4 areas that are strategic where bare minimum Central Public Sector Enterprises (CPSE) will be maintained and rest privatised. In the remaining sectors, all CPSEs will be privatised”.

Sitharaman announced that two more Public Sector Banks apart from IDBI and one General Insurance Company will be taken up for disinvestment in 2021-22.

She declared that NITI Aayog – the government’s think tank – has been asked to work on the next list of central public sector companies for strategic disinvestment.

To encourage disinvestment, she said an incentive package of Central funds will be given to the states to encourage the latter to speed up disinvestment.

“Despite COVID-19, we have kept working towards strategic disinvestment. A number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, Bharat Earth Movers Limited, Pawan Hans, Neelachal Ispat Nigam Limited among others will be completed in 2021-22,” declared Sitharaman.

“Other than IDBI Bank, we propose to take up two Public Sector Banks and one General Insurance Company in the year 2021-22. This will require legislative amendments and I propose to introduce the amendments in this session itself. In 2021-22, we also propose to bring the IPO of LIC for which I will bring the requisite amendments in this session itself,” she added.

However, a few people opined that disinvestment does not necessarily mean privatization. PSUs will buy PSUs also, said a pro-government commentator.