Budget 2021 lays out road map for overhaul of state-run companies

The Union Budget for 2021-22 has laid out a road map for overhauling public-sector enterprises, with Finance Minister Nirmala Sitharaman announcing broad details of the privatisation policy. The policy classifies central public-sector companies, banks and insurance companies into four strategic areas, as below.

* Atomic energy, Space and Defence

* Transport and Telecommunications

* Power, Petroleum, Coal and other minerals

* Banking, Insurance and financial services

These sectors would have a minimum presence of public-sector companies, and companies currently present in these would be privatised, merged, ir subsidiarised with other PSUs, or closed. To show the government’s intent for privatisation, the finance minister has also announced that two public-sector banks and one general insurance company would be privatised in the year 2021-22. She, however, did not specify the names of these companies.

In all other sectors, PSUs will be privatised or closed.

There were about 249 PSUs in 2018-19. Of these, 70 were loss-making, with combined losses to the tune of Rs 31,635 crore that year, according to data from Standing Conference of Public Enterprises.

Disinvestment proceeds from privatisation would be used to finance social sector and developmental programmes of the government.

The policy focuses on minimising PSU presence, and create a new investment space for private sector participation. “After disinvestment, economic growth of Central Public Sector Enterprises/financial institutions will be through infusion of private capital, technology and best management practices,” the finance minister said in her Budget speech.