Sun. Nov 27th, 2022

India’s Union government is planning to privatise five to six public sector undertakings (PSUs) in December-January, and close these transactions in the current financial year, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said. The companies will include Bharat Petroleum (BPCL), Shipping Corp of India, Pawan Hans, Central Electronics and Nilachal Ispat Nigam, Pandey added.

Speaking at the Confederation of Indian Industry (CII) Global Economic Policy Summit 2021 on November 17, Pandey said that he also expects to complete privatisation of BEML and Neelachal Ispat by 2021-22.

 

After 19 years, privatisation of five to six PSUs will take place this year itself, Pandey said at the Global Economic Policy Summit.

Pandey said privatisation of Bharat Petroleum Corporation Ltd (BPCL) is in the due diligence stage. Three bidders have reportedly shown interest in acquiring the oil marketing company.

 

“These are the transactions which we think that financial bidding can take place in December-January, and we can actually privatise them during this year itself,” Pandey said.

While there is a consultative process at the official and ministerial level to accomplish things faster, the Cabinet Secretary also held a meeting to further simplify the process, he said.

 

Department of Economic Affairs Secretary Ajay Seth, who also spoke at the event, said: “We need to increase capital expenditure in India to make up around 10 percent of the country’s GDP in the next few years.”

The government is also working to launch the initial public offering of Life Insurance Corporation of India (LIC) in January-March, Pandey said. This IPO will be a big event for markets, he added.

He noted that capital markets are not mature enough to give long-term finance and there is a need to further develop them for long-term financing.

 

Talking about the real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), Seth said that the government compiling a list of good and bad practices for InvIT and ReITs from the recent InvITs launched by PSUs.

“We will encourage more PSU to utilise InvITs to raise funds,” he said.

To set the context, compared to more than 800 listed REITs globally with a combined market capitalisation of $2.4 trillion, the product is still in its early days in India.

 

Seth also said that the unorganised sector has lost wealth due to the COVID-19 pandemic. “It will take time to restore lost wealth in unorganised sector due to COVID-19.”

Furthermore, the government and the Reserve Bank of India are closely watching credit-off takes by MSMEs. Government is also closely monitoring semiconductor shortage,” he stated.

 

DIPAM is the Department of Investment and Public Asset Management and comes under the Finance Ministry. Its role is to privatize PSUs or take them public through initial public offerings and shed stake in listed PSUs through offer-for-sales. The department also monitors dividends paid and share buybacks by PSUs.

 

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