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Sunday, March 7, 2021

Cabinet approves policy to privatize PSU companies before budget, know what will be the impact

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The Union Cabinet has approved the privatization of the much awaited policy Public Sector Undertakings (PSU) before the budget. It is expected to be announced in the Union Budget 2021. The policy will create a roadmap for its presence in government-owned entities in the strategic and non-strategic sectors, which were approved in the cabinet meeting held on Wednesday. The outline of this policy and the strategy of privatization of PSUs will be announced by Finance Minister Nirmala Sitharaman in the Union Budget to be presented on 1 February.

This policy was part of the Aatmanirbhar Bharat package announced by Sitharaman in May 2020 as a coherent policy, where all sectors would be opened for private sector participation. The government had then announced to limit the presence of PSUs in strategic sectors from one to four and to privatize, merge the remaining companies under one holding company.

The government will completely exit the non-strategic sector companies. The time for privatization of companies in the non-strategic sector is likely to be decided on a case by case basis. Detailed consultations were held between government departments and ministries, which led to the delay in approving the privatization policy.

These sectors are classified as strategic sectors.

The official said that there were several discussions between a group of ministries which have framed and shaped the policy. According to the initial draft of the policy called for by the Department of Investment and Public Asset Management, about 18 sectors were classified as strategic sectors, including electricity, fertilizer, telecom, defense, banking and insurance. They are classified as Mining and Exploration, Manufacturing and Processing, and Services.

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