Privatisation of PSUS is a positive step: Experts

After Union Finance Minister Nirmala Sitharaman announced to privatise two public sector undertakings (PSUS0 and one insurance company, experts believe that this is a positive step and it will help the government to get money from the market.

Ambarish Kaliga, a market analyst at Karvy Financial Services, told The Sunday Guardian, “Privatisation of the PSUS would help to clear off the bad debts and the banks could concentrate on lending business.”

Talking about the privatisation of PSU banks, Kaliga told The Sunday Guardian, “I believe that there are international banks which are ready to come to India and invest. I think that the government would sell its stakes in the smaller public sector undertakings and not the larger ones like SBI. Punjab National Bank or Bank of Baroda.”

The government had set a target of Rs 2,10,000 crore by selling its stake in the public sector banks and financial institutions in the 2020-21 Union Budget. However, the government was able to collect only Rs 32,000 crore. So, in the current budget, the government had decided to set an estimate of Rs 1,00,000 crore from the sale of stake in public sector banks and financial institutions.

The government has decided to sell its stake in Air India, Bharat Petroleum Corporation Ltd, Shipping Corporation of India, Container Corporation of India, IDBI Bank, Bharat Earth Movers Ltd, Pawan Hans

Ltd, Neelachal Ispat Nigam Ltd by the end of financial year 2021-22. During this financial year, the NDA government is also expected to offer the initial public offer (IPO) of the Life Insurance Corporation of India. Experts believe this is a big move.

Talking about the objections raised by the employees of the LIC against the selling of its stake, Kaliga told The Sunday Guardian, “The government has incurred losses due to the pandemic. Now when the government needs money, it has no other options than going for disinvestment,” adding that the government has not levied new tax on citizens, so it has to go for disinvestments.

Talking about the setting up of “bad banks”, Kaliga told The Sunday Guardian, “This is a positive step. This will help clear off bad debts of the banks and focus on giving credits to the customers.” Moreover, the government has also decided to set up Development Financial Institutions (DFI) to finance social and economic infrastructure projects.