New Delhi: The Government of India has made it clear to its ministries that there will be no further dilution or review of the list of Public Sector Enterprises (PSEs) identified for strategic sale, signalling a renewed push to accelerate the Centre’s disinvestment programme.
The decision assumes significance as several ministries, including Heavy Industries, Fertiliser and Housing, have reportedly been making repeated representations seeking a review of the companies included in the strategic-sale and disinvestment plans.
However, the Centre has now conveyed that ministries will have to work in a coordinated manner towards implementing the existing strategic-sale roadmap rather than seeking further changes to it.
Centre Rules Out Further Changes
The government’s latest position comes after an extensive review of public sector companies over the past few months.
The exercise, which involved the Prime Minister’s Office (PMO), examined companies that had earlier been identified for strategic disinvestment, listing or closure.
While the review resulted in some changes to the original list, government sources indicate that there is now little possibility of further dilution.
The message being conveyed to ministries is that the strategic-sale process must move forward and that individual departments should not continue seeking changes to the list.
Ministries Had Sought Review
The issue had been the subject of discussions in several inter-ministerial meetings, where departments had sought reconsideration of the proposed sale of some public sector companies.
According to senior government officials, ministries had repeatedly approached NITI Aayog and other government agencies with suggestions that the strategic-sale list be reviewed.
Some ministries had argued for retaining certain public sector companies under government control, particularly those considered strategically or operationally important to their respective sectors.
The government, however, has now sought greater coordination among ministries to ensure that the disinvestment programme is not repeatedly delayed by departmental objections.
BPCL, Shipping Corp Already Dropped From Earlier Plans
The government’s strategic-sale programme has already undergone changes in recent years.
Individual ministries had succeeded in getting several companies that were originally considered for strategic sale out of the government’s disinvestment plan.
Among the prominent examples were Bharat Petroleum Corporation Ltd (BPCL) and Shipping Corporation of India, whose proposed privatisation processes did not proceed as originally envisaged.
Sources indicate that the Centre is now reluctant to make further concessions or undertake another broad review of the strategic-sale list.
The latest position is aimed at bringing greater certainty to the disinvestment programme and preventing companies from repeatedly moving in and out of the government’s privatisation roadmap.
Why the Government Wants to Push Strategic Sales
The Centre’s renewed focus on strategic sales is driven partly by its objective of maximising revenue from disinvestment.
Officials believe that a clearer and more stable list of companies will allow the government to devote greater administrative attention to transactions that are actually ready to move forward.
The government also wants to send a strong signal that it remains committed to its policy of reducing its presence in sectors where private participation is considered feasible.
Strategic sales can potentially generate larger receipts than minority stake sales because they involve the transfer of management control along with the government’s stake.
Disinvestment Process Had Become Complicated
Despite the Centre’s stated commitment to disinvestment, the process has faced several challenges.
One of the problems has been the absence of a consistently maintained and centralised list of public sector companies earmarked for different forms of government action.
As a result, companies originally identified for privatisation sometimes disappeared from the active pipeline as ministries raised objections or circumstances changed.
BEML and Shipping Corporation of India are among the examples where the original disinvestment plans faced complications.
The government’s latest approach appears aimed at addressing this uncertainty by ensuring that ministries work collectively towards the strategic-sale objective rather than seeking repeated revisions.
IDBI Bank Remains Key Strategic Sale on the Table
At present, IDBI Bank remains the most prominent strategic-sale transaction being closely watched.
The proposed privatisation has attracted interest from bidders including Fairfax Financial Holdings, associated with Prem Watsa, and Emirates NBD.
Both potential bidders already have a presence in the Indian banking sector through their investments in Indian banks. Fairfax has exposure to CSB Bank, while Emirates NBD is associated with RBL Bank.
Their participation in the IDBI Bank process could therefore require regulatory consideration, particularly from the Reserve Bank of India (RBI), given the existing banking interests of the potential buyers.
Any necessary regulatory exemptions or approvals would be important for facilitating the acquisition and subsequent operation of the banking entity.
IDBI Bank Deal Could Set the Tone
Government sources indicate that the Centre’s focus on new strategic-sale transactions could intensify after the completion of the IDBI Bank transaction.
The outcome of the IDBI Bank process is therefore being closely watched not only for the revenue it could generate but also because it could provide momentum to the broader strategic-sale programme.
Once the transaction is completed, the government is expected to identify additional entities for strategic sale based on the revised disinvestment roadmap.
This could mark a shift from a relatively slow-moving process towards a more transaction-focused approach.
Centre Needs to Move Faster
The timing is important for the government as the BJP-led government at the Centre enters the third year of its current term.
Officials are expected to move quickly if the government wants to undertake additional strategic-sale transactions within the remaining part of its current tenure.
The process involves multiple stages, including valuation, transaction structuring, regulatory clearances, identification of prospective buyers and, in some cases, resolution of issues relating to land, employees and liabilities.
Any prolonged delay can therefore push a proposed transaction beyond the government’s intended timeline.
Disinvestment Receipts Already Cross ₹60,000 Crore
The Centre has already mobilised more than ₹60,000 crore through disinvestment, according to the information available with the government.
The government could potentially move closer to, or even exceed, the ₹80,000-crore disinvestment target if the IDBI Bank strategic sale materialises along with other smaller stake-sale transactions.
The eventual receipts will depend on the valuation and final structure of the IDBI Bank transaction as well as the completion of other proposed stake sales.
A successful strategic sale would provide a significant boost to the government’s overall disinvestment receipts.
Stronger Push Expected on PSU Privatisation
The Centre’s latest message to ministries indicates that the government wants to bring greater consistency and momentum to its strategic-sale programme.
While ministries may continue to raise sector-specific concerns, the government appears determined to prevent repeated reviews from slowing down the process.
The immediate focus is likely to remain on completing the IDBI Bank transaction and identifying additional companies that can move through the strategic-sale pipeline.
The broader objective is to ensure that the government’s disinvestment policy translates into actual transactions and revenue rather than remaining confined to a list of proposed privatisations.
With the Centre now ruling out further dilution of the existing strategic-sale framework, ministries are expected to align their efforts with the government’s disinvestment priorities.
