Govt Will Sell All Profit-Making PSUs To Private Firms; Govt Doesn’t Want To Run Businesses!
Privatization is believed to improve the company’s productivity and objectivity. The massive change in government attitude would revive the economy post-pandemic and generate employment.
The Centre is likely to first privatise profit-making state-run companies, a shift from the previously announced strategy of focusing on loss-making units, Business Standard reported.
The BSE PSU index has increased around 26% since the Budget 2021, compared to an 8% increase in the benchmark Sensex. Nitin Shahi, Executive Director of FINDOC, a financial services group said “This can prove to be a very strong step taken by the government for improving the overall economy of the country,”
The Government Has No Business To Be In Business
Prime Minister Narendra Modi on Wednesday in a webinar hosted by DIPAM said the government has no business to be in business and his administration is committed to privatising all PSUs except the bare minimum in four strategic sectors.
PM Modi went on to say, “We cannot continue with public entities just because they have been operational for so long. The government’s focus should be on the welfare of society and policies related to people. It sounds like misusing the talent of our officers to keep them in the business operation of public entities.”
The Ultimate Goal To Privatise PSUs
A divestment target for Rs 1.75 lakh crore is set for the financial year 2021-22. The NITI Aayog, which is identifying public sector units (PSUs) for privatisation, could put out the first list of companies in April.
“Our focus is to monetize and then modernize. The private sector brings modern technology, a change in the management mindset and creates more efficient jobs. This can increase inefficiency of the system,” PM Narendra Modi said during the webinar. He goes on to add that the money coming from this monetization will be utilized to enhance rural connectivity, supply safe drinking water and make provisions for cheap housing.
PSU privatisation, according to Vijay Bhambwani, Senior Research Analyst, Equitymaster, would free up funds for the government while also making the firms more competitive and lean, boosting shareholder value because most of these stocks are trading at a discount to their private-sector peers.
The ultimate goal is to ensure that our economic resources are efficiently tapped to achieve economic growth.