New Privatization Policy: Only 4 PSUs In Banking, Insurance; Rest Everything Will Be Sold Off
In the next few weeks, the Union Cabinet plans to take up the proposal to define ‘strategic sectors’ after months of discussions as per the sources.
Strategic Sectors Note
So far, the cabinet note has been circulated to 49 central ministries and departments and has a lot of inputs.
However, the note is now ready and it could be available for consideration within 10-15 days, sources said.
According to reports, “Banking and insurance will be designated as strategic sectors,”.
What Does That Mean?
This means that there would only be four state-owned banks and insurance companies each, over the long run.
To achieve this, the government plans to go for further consolidation and may privatise some of its companies in the financial sector.
Apart from banking and insurance,other sectors like Indian Railways, oil and gas, defence, space, and atomic energy are also expected to be categorised as strategic sectors.
Part Of Aatmanirbhar Bharat Abhiyaan
Prior to this, the ‘strategic sector’ policy was announced by Finance Minister Nirmala Sitharaman being a part of the ‘Aatmanirbhar Bharat Abhiyaan’.
So in simple words, each strategic sector will not have more than four state-owned companies.
Finance Minister Nirmala Sitharaman said, “ In the notified strategic sectors, there would be only one to four public sector enterprises. They will be merged or brought together, so there won’t be mushrooming of the public sector,”.
So far, no time limit is provided for implementation of the new privatisation policy.
According to sources, “once a sector is designated as ‘strategic’ or ‘non-strategic’, there is no fixed timeline for when the government has to reduce or exit its presence,”.
It seems that the government plans a complete exit from ‘non-strategic’ sectors.
Currently, there are 12 PSBs remaining after the latest round of consolidation of public sector banks (PSBs).
The Centre had announced a third round of PSB consolidation on August 30, 2019.
According to this announcement, Punjab National Bank would acquire Oriental Bank and United Bank of India; Canara Bank would acquire Syndicate Bank; Union Bank of India would buy Andhra Bank and Corporation Bank; and Indian Bank would acquire Allahabad Bank.