The process of selling PSUs could be completed sooner than thought. The NITI Aayog and the Department of Investment and Public Asset Management (DIPAM) are considering some proposals which could cut short the time to merely a few months.
Earlier the process was said to take a year or more.
Cutting The Red Tape
The red tape cutting measures include bypassing the Core Group of Secretaries on Divestment (CGD) who hold the power of approval and consultation which contributes to an extended timeline.
Another measure is switching from individual clearance for the PSUs to sector-wise approval.
Advisors could be appointed as well as the shortlisted bidders could be intimated.
The approval from Core Group of Secretaries on Divestment (CGD) of privatisation of entities in non-strategic sectors could be made redundant.
The Traditional Process
Presently the NITI Aayog selects candidates for disinvestment which then goes to the CGD.
The CGD passes its suggestions and concerns forward to the Alternative Mechanism (AM).
The AM consists of a finance minister, the minister for administrative reforms, and the minister for roads, transport and highways.
It is after their approval that the proposal from DIPAM goes forward to the Cabinet Committee on Economic Affairs (CCEA). The CCEA is expected to grant in-principle approval for divestment.
Strategic and Non-Strategic Sectors
NITI Aayog has been approached by Dipam to assist them in establishing an order in which the selected PSUs could be closed, privatised or merged in non-strategic and strategic sectors.
The candidates could be determined by sectoral analysis, and their timing.
Non-strategic sectors include hospitality and steel.
Strategic sectors comprise defence, nuclear energy, telecom, electricity, coal, petroleum and banking, insurance and finance services.
It is strategic because the government wants to be involved in at least a bare minimum capacity.
Those that are non-strategic will be closed or privatised since these are not among the Centre’s priorities at the moment.
In another effort the government is mulling streamlining the long and arduous process of PSU closures which currently takes over 13 months to shut.
The guidelines put in place by the Department of Public Enterprises could be trimmed to remove some steps such as prep work for dues estimation, responsibilities towards secured creditors, movable asset disposal and public infrastructure built on land for PSU utilisation.
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