Oversee strategic divestment of CPSEs
NEWDELHI: To accelerate strategic disinvestments in central public sector enterprises (CPSEs), the Cabinet Committee on Economic Affairs (CCEA) mandated a panel headed by finance minister Arun Jaitley to oversee the asset sale process. The panel—a so-called alternative mechanism approved by the CCEA at a meeting on Wednesday—may also help the government raise more revenue from asset sales.
The additional revenue will be handy in what could be a fiscally challenging year, with the RBI reducing by half to ₹30,659 crore the dividend it will pay the government, an expected shortfall in revenue from the telecom industry and higher expenditure on allowance payouts to central government employees.
Road transport and highways minister Nitin Gadkari and the ministers to whose departments CPSEs report will be members of the panel, which will decide on matters relating to terms and conditions of the strategic sale— from calling for expressions of interest from potential buyers to inviting financial bids.
Strategic disinvestment implies the sale of a substantial portion of government stake in a CPSE with transfer of management control.
The new mechanism will empower the so-called Core Group of Secretaries (CGD) on disinvestment to take policy decisions on procedural issues and to consider deviations that are necessary from time to time for effective implementation of the CCEA’s decisions.
“Without the alternative mechanism, we would have to go to the CCEA at each stage for clearance during the process of selling stake in a CPSE. Now we will approach the CCEA for clearance only after a buyer is finalised under the new mechanism. This will speed up the process of strategic disinvestment,” a finance ministry official said on condition of anonymity.
The government has set up an alternative mechanism with the same composition to decide on minority stake sales in CPSEs.
The Centre has set an ambitious target of raising ₹72,500 crore from disinvestment in 2017-18 including ₹15,000 crore from strategic asset sales. So far this year, the government has raised around ₹10,000 crore through stake sales.