Air India sale to boost privatisation: Economic Survey

Air India sale will give a boost to India’s privatisation drive, the Economic Survey said on Monday, as it suggested redefining the public sector role in business enterprises to encourage private participation in all sectors. The government earlier this month handed over ownership rights in national carrier Air India to Tata Group for Rs 18,000 crore. The amount includes the takeover of the debt burden of Rs 15,300 crore and another Rs 2,700 crore in cash.

“This progress on privatisation of Air India is particularly important, not only in terms of garnering disinvestment proceeds but also for boosting the privatisation drive,” the Survey said. This is the first privatisation in 20 years and will pave the way for the sale of more CPSEs, which are lined up for sale — BPCL, Shipping Corporation, Pawan Hans, IDBI Bank, Concor, BEM and RINL. Since 2016, the government has given ‘in-principle’ approval for strategic disinvestment of 35 CPSEs and/or subsidiaries/ units/ joint ventures of CPSEs and IDBI Bank.

“In order to realise the mission of New, Self-reliant India, there was a need to redefine public sector participation in business enterprises and to encourage private sector participation in all sectors,” the Survey said. The government had last year approved a policy of strategic disinvestment of public sector enterprises that will provide a clear roadmap for disinvestment in all non-strategic and strategic sectors. The guideline for implementation of new public sector enterprise policy for CPSEs have been notified on December 13, 2021.

“This will help the government to make use of disinvestment proceeds to finance various social sector and developmental programmes while disinvestment shall infuse private capital, technology and best management practices in the disinvested CPSEs,” it said. The new PSE Policy envisages the classification of CPSEs into strategic and non-strategic sectors and exempts certain CPSEs such as those set up as not-for-profit companies from the scope of the policy.

The strategic sectors as per the policy are atomic energy; space and defence; transport and telecommunication; power; petroleum; coal and other minerals; banking, insurance, and financial services. Under the four broad baskets in which the strategic sectors are classified – i.e. national security, critical infrastructure, energy and minerals and financial services – only a bare minimum presence of CPSEs in the aforesaid strategic sectors is to be maintained. The non-strategic CPSEs will be privatised or otherwise shall be closed.

“Thus, the policy on public sector enterprises provides a clear path for disinvestment in all non-strategic and strategic sectors and strengthens the idea of Minimum Government – Maximum Governance,” the Survey noted.

Stating that there has been an emphasis on disinvestment in the last 5 years, the Survey said that after 2014, the disinvestment policy was renewed with stake sales in PSEs, such as Hindustan Petroleum Corporation Ltd (HPCL), Rural Electrification Corporation Ltd (REC), Dredging Corporation of India Ltd (DCIL), Hospital Services Consultancy Corporation Ltd (HSCC), National Projects Construction Corporation Ltd (NPCC), THDC India Ltd and North Eastern Electric Power Corporation Ltd.

Besides, there have been the successful listing of PSEs like IRCTC, HUDCO, Cochin Shipyard Ltd, General Insurance Corporation, New India Assurance Company Ltd, Mazagon Dock Shipbuilders Ltd (MDL) and RailTel on the stock market.

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