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Should the government dilute stake in Navratnas?

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What a revelation this has been? Few months back the question was Does the government has the will to reduce stake in Navratnas? Now, that question is out of the window as there is a clear majority and a crystal clear answer. We can now dare to ask a question like this. We might as well see the next wave of reforms or Reforms 3.0.

If the new government dilutes its stake in the navratnas of which they are many, by 20% it will unlock a cash of 3 lakh crores. That is even more than what the alleged Indian origin money in swiss bank.

Currently, in Navratna and mini-navratna companies, government stake exceeds 75% and there is no harm that in the first phase, it is brought down by 20% to enable the government to mobilize nearly Rs.3 lakh crores which would be enough to contain fiscal deficit by less than 3%. (ASSOCHAM)

Government holdings in many Navratnas ranges from 56% to as much as 75% and some times 100%. Most of the companies are not listed. A good example is BSNL. The oldest telecom company of India growing at pace much slower than its private counterparts. Needless to say it is lagging in subscribers and revenues.

BSNL was trying to dilute 10% of the stake but the opposition came from all corners including employees. Now, the government don’t have to bed with the leftists who were opposing everything and anything.

The fiscal deficit of the government is at 5% which is not desirable. For it to bring it down to less than 3% reforms of a different magnitude has to take place and as per ASSOCHAM it should start with stake dilution in the PSU’s.

There are 18 Navratnas, 58 mini-navratnas and 242 public sector units employing 15.7 lakh people. Those are quite some numbers and now we know where the 3 lakh crores come from. 

There are multiple things which everybody wants from the new government. And everybody knows that it no longer will be a dream.

I would like to open this up to trak.in readers. Should the government reduce the stake in Navratnas to 51% in a phased manner?

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