Dubious disinvestment

The REC-PFC deal makes little sense

The Union Cabinet has approved the sale of a majority stake in REC (formerly Rural Electrification Corporation) to Power Finance Corporation (PFC). This decision will create a single state-run company that will dominate the power finance sector, particularly lending to renewable energy projects. PFC will take over a 52.63 per cent stake in REC, leaving only 6 per cent with the government, and thus have control over the management of REC. In future, REC will depend on PFC when it comes to raising capital. In essence, this will count as a takeover although the government has insisted that the two