PSU Sale, Disinvestment: Govt Gets Scolding Over PSU Sale To Other PSUs For ‘Meeting Targets’
The Central Government has been on the receiving end of some rebuke from the Comptroller and Auditor General (CAG) of India for selling the four public sector units to other public sector entities.
Read on to find out the reason behind the scolding handed out PSUs by the CAG!
CAG Scolds The Centre For Selling Off 4 PSUs To Other PSUs
Back in 2018-19, four public sector units were sold off to other public sector entities and this has attracted a berating from the CAG. The CAG said that disinvestments of these types lead to a transfer of resources that are already with the public sector to the government. CAG noted that this does not change the slip of the public sector in the PSU.
The Centre has sold off the major oil marketing company and a subsidiary of the ONGC to another PSU ONGC. As per reports, the Central Government has also conducted more similar transactions in order to meet disinvestment targets over the years. However, while selling off one PSU to the other, the Centre failed to dispose of the bulk of companies that were classified as ailing by the Cabinet and were cleared for the sale.
Revenue Receipts Understated, Capital Receipts Overstated Due To Incorrect Classification
The Central Government had raised an amount of Rs. 72,620 crore through the disinvestment in 2018-19. This disinvestment included the sales of the Rural Electrification Corporation, Dredging Corporation(DCI), HSCC (India), and National Projects Construction Corporation. REC was sold to Power Finance Corporation, and DCI was sold to a consortium of Port Trusts.
Additionally, the CAG observed that neither the SUUTI nor its assets, liabilities have been depicted in the Union Government Finance Accounts.
The CAG said, “As a result of the incorrect classification, the capital receipts of government for the year were overstated and revenue receipts understated, with corresponding impact on the revenue surplus.”
The sale of the shares by the Specified Undertaking of the Unit Trust of India (SUUTI), worth Rs. 12,500 crore. The SUUTI is an entity that has been created to deal with the UTI’s assets and liabilities.