All sectors will be opened up for private firms and PSUs will be
privatised in non-strategic sectors.
While
announcing the economic package to deal with the impact of Covid-19,
Finance Minister Nirmala Sitharaman had said that the government would
formulate a new policy for public sector undertakings (PSUs).
All sectors
will be opened up for private firms and PSUs will be privatised in
non-strategic sectors. This will not only help improve efficiency in the system
but also raise resources for the government. The government has budgeted to
raise over Rs 2 trillion through disinvestment in the current fiscal year
(chart 1). Notably, PSUs
have improved their dividend payment in the past few years.
However, the
data shows that recent developments in PSUs can limit the value that the
government can expect to raise. In FY20, the biggest chunk of disinvestment
inflow came by selling stakes in PSUs through exchange-traded funds (ETFs), as
shown in chart 2. Also, the performance of PSUs has been weak in the market.
The BSE PSU
index has fallen more sharply as compared to the BSE Sensex in the last two
years (chart 3). The fall in stock prices has eroded significant value in some
of the largest PSUs, which will limit receipts for the government (chart 4).
One clear reason for this could be the poor financial performance of PSUs:
Their sales and profits have come down significantly in recent quarters (chart
5).
There are
some sectors in which sales performance of PSUs has been better than private
companies, such as the power sector (chart 6). But the case is different in the
refinery sector.
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