 "Neeraj Kumar Gupta")
Budget 2016-17 had the most comprehensive policy shift regarding the sale of government’s stake in public sector units since the Vajpayee government. Neeraj Kumar Gupta, secretary of the newly-named Department of Investment and Public Asset Management, talks to Arup Roychoudhury about the new strategic sale policy as well as the minority stake sale plans for the upcoming financial year. Excerpts:
The Budget announced a new policy and a new direction for strategic sales, with a target of Rs 20,500 crore. Can you tell us more about it?
The fact that the department has been renamed as Department of Investment and Public Asset Management (DIPAM) underlines the focus and the new approach of the government, that what we are doing is management of investment. And, disinvestment for resource augmentation is part of that. There are nearly 235 central public sector enterprises (CPSEs), 160-odd are in profit, and only 44 are listed. Even if we take the value of the ones listed, they are commanding 12 per cent of the combined market capitalisation.
When the government looks at its investment in various enterprises, it has a lot of options available to use this investment for higher economic activity and higher developmental expenditure directly or indirectly and also leveraging the assets available for resource mobilisation. The processes were already there, but there was no convergence of the guidelines and various examinations, like this Budget has done. It is a paradigm shift and will go a long way as far as governance of CPSEs is concerned.
What is the process that will be followed for strategic sales, starting from NITI Aayog to the Cabinet Committee on Economic Affairs?
The strategic disinvestment as an intent came in the last Budget announcement. The set of processes and the mechanism were to be put in place, which has been done now. NITI Aayog is in an advisory role. In the old process, there used to be a Disinvestment Commission, which used to advise the government on which CPSEs could be strategically divested. That means, giving up management control along with equity. The identification of CPSEs, how they should be valued, what should be the mode of sale, and how much equity the government should offload, along with management control, are the aspects of which NITI Aayog has been given the responsibility.
The advice of NITI Aayog, with all the inputs, will go to the core group of Secretaries on Disinvestment (CGD) and Cabinet Committee on Economic Affairs (CCEA), where the final decision will be taken. So there are executive functions and advisory functions. The executive structure is a three-tier process, where there is one evaluation committee, the CGD and CCEA.
How will oversight be ensured on such an involved process?
We are creating an independent external monitor, which will be a single-member or multi-member entity consisting of credibly important independent people, who might be from the government or outside. During any process if anybody has any grievance, this will be the mechanism. If you have any issue on the valuation or selection, you are welcome to approach this monitor. It will have oversight on the process. That shows the commitment of the government in ensuring transparency. It will also carry out concurrent audits of the process.
Moving away from strategic sales, the target for minority stake sales has been budgeted at Rs 36,000 crore. Given that the volatility in the equity markets is expected to continue, how tough a target is it?
I have to choose the right set, keeping in mind the volatility. The government is committed to higher expenditure, while keeping the fiscal deficit in place. Volatility is a challenge for the department, but we have to meet our targets. It will be our best endeavour to do so.
For the current year, some Rs 18,400 crore has already been achieved and the revised target is Rs 25,312.6 crore. With less than two months left in this financial year, can we expect the remainder of the revised target to be met through buybacks?
Whatever instruments are available for effecting disinvestment and raising money against equity, under the law, can be considered. A revised estimate has come. Again, my best effort will be to meet that target. And, all the options are open to achieve that target. I have to do it keeping in mind how the markets are behaving and what limitations exist. Let me clarify there is no sense of selling in distress and the two previous disinvestments were not panic sales. I can assure you that we will be prudent.
