Going For The Kill

The success of PSU sales will depend on whether they are actually sold or picked up by another PSU

Illustration by Raj Verma Illustration by Raj Verma

With three quarters of FY2019-20 almost over, and just Rs 17,364.26 crore of disinvestment proceeds of Rs 1,05,000 crore budgeted for the year in its kitty, the Narendra Modi government was expected to either go on a last minute public asset selling spree or fail to meet its fiscal deficit target.

The Cabinet approval for selling the government's entire stake in Bharat Petroleum Corporation (BPCL), Shipping Corporation of India Ltd, Tehri Hydro Development Corporation India Ltd and North Eastern Electric Power Corporation Ltd, and 30.8 per cent stake out of the 54.5 per cent it holds in Container Corporation of India Ltd., shows that disinvestment plans are as per schedule. Assuming all the companies find buyers at current market rates, the government may well achieve its disinvestment target too. The decision to sell these public assets, however, will not be judged only by the one-time resources it can generate, but the value it can create in entities that go out of government control.

Profit-making oil refiner BPCL could get several suitors that may include biggies such as Saudi Arabia's Aramco and India's largest company Reliance Industries. What about others? History is replete with instances where PSUs that are not attractive for whatever reasons are bought by other PSUs and the government gets its money without much strategic advantage to the acquirer or the target entity. Will we see a repeat? Any sale that adds value to the shareholder, helps the PSU chart a steady growth path, and does not jeopardise national interests, is welcome. Sale, for the sake of immediate revenue gains, may not be the best approach.