The Finance Ministry is tripping on its ‘own words’ as far as the strategic sale of public sector units is concerned. While its 2015-16 Budget spoke grandly of “strategic disinvestment”, the government has not followed up with a policy on it..

Prima facie, strategic stake sale means giving away management control, but so far the policy has only been of minority stake sale. Even as the need for a policy on strategic sale has been flagged with Finance Minister Arun Jaitley, various arms of his Ministry are working out ways to sell PSU equity what with less than six months left for the government to meet the target of mopping up nearly ₹30,000 crore from strategic sales before the fiscal year ends.  

Of the Budget 2015-16’s target of ₹69,500 crore from disinvestment, ₹28,500 crore is to come from strategic stake sales.

“What we have as of now, is a policy on disinvestment that has laid out that stake sales in PSUs should not exceed 51 per cent of their equity, thereby maintaining their public sector character. But a strategic sale, as outlined in the Union Budget, would require giving away management control and so we need to decide how it should be done,” said a senior government official.

Strategic sale in PSUs is back in focus after more than a decade. Between 1999 and 2004, the government had divested majority stake or exited 16 PSUs, including Modern Food Industries, Hindustan Zinc and Bharat Aluminium Company. Post 2004, the UPA government chose to go for minority stake sales.

“We can only begin to identify PSUs for strategic sales after a policy is in place,” said the official, adding that the focus would be to ensure that the PSUs identified for majority stake sales get good valuation. Consultations have begun for policy clarity and to identify the PSUs. The Ministry of Heavy Industries and the Board of Reconstruction for Public Sector Enterprises will also be consulted for the exercise.

Jaitley had in May said the government would identify a set of PSUs that would be put on the block for strategic sales, later indicating that these could include loss-making hotels of the ITDC. Simultaneously, the government has also decided to shut down six loss-making PSUs including HMT Watches, HMT Barings, HMT Chinar Watch, Hindustan Photo Films, Hindustan Cables and Tungbhadra Steel.