The government will soon begin discussions with Niti Aayog and Energy and Petroleum Ministries to bring its equity holding down in a few Public Sector Units (PSUs) below 51%. This includes change of rules and modes of diluting the government's stake in the PSUs.
The Centre will pare down its stock holdings to 51% in 2-3 PSUs in the current fiscal. This would also call for amendments to some laws. These companies will then be out of surveillance agencies such as the Central Vigilance Commission (CVC) and Comptroller and Auditor General of India (CAG).
Furthermore, certain sensitive concerns viz. reservation policy in PSUs may be diluted once the government cedes direct control of its stake in the PSUs, IANS reported.
The Department of Investment and Public Asset Management (DIPAM) will soon hold inter-ministerial talks and outline the methods and strategies of bringing the government's stake down to 51% in the PSUs.
This development comes in the wake of government's decision to look for other avenues such as disinvestment after the finance minister Nirmala Sitharaman's recent announcement to cut the corporate tax rate for domestic firms and new domestic manufacturing companies.
The corporate tax cut alone will have a tax implication of Rs 1.45 lakh crore on the Centre. In addition, the government's decision to withdraw super-rich tax on long and short term capital gains from both foreign and portfolio investors will hurt its revenue collection by about Rs 1,400 crore.
With this, the government has come under tremendous pressure to meet its fiscal deficit target for 2019-20 due to a falling revenue collection and a series of measures taken in the last month to reinvigorate the sagging economy.
The report further said that the government will also realign its holdings in the PSUs to allow greater availability of its shares and strengthen the market's depth.
"In some non-strategic companies we can go below 51 per cent irrespective of whether the government directly or indirectly holds a majority stake," an official told the news agency.
Sitharaman in her budget speech had said that the strategic disinvestment of certain PSUs would continue to be the government's focus and it will offer more of them for strategic participation by the private sector.