The Modi government has made several announcements in the budget regarding the privatization of PSU companies. That is why it is believed that the number of PSU companies could be reduced from 300 to close to 24. The government has decided to focus on privatization of non-core sector state-owned companies. Government companies running at a loss will now close. Finance Minister Nirmala Sitharaman on February 1 in the budget identified nuclear energy, space, defense, transport, telecommunications, power, petroleum, coal, banking, insurance as the strategic sector.
What is the government’s plan?
According to sources in an English newspaper, the central cabinet will take a decision on the recommendations of the policy commission. The policy commission has been asked to identify the companies in which the government will sell its strategic stake in the next phase. The central government has made it clear in the budget that there will be only four main sectors. Each of these sectors will have a maximum of three to four government companies.
According to the Public Enterprises Survey 2018-19, as on March 31, 2019, there were 348 state-owned companies in the country. Of which 249 companies were running. The revival of the remaining 86 companies is underway. The process of closing 13 companies was underway.
Why is the government doing this?
Experts say the government wants to partner with the private sector to get the corona-ridden economy back on track. As a result, foreign investors are expected to invest even more in India. The influx of foreign investors will strengthen Indian industries. So that more jobs will stand a chance.
“Privatization of a large number of state-owned companies will not be easy for the government,” Asif Iqbal, head of research at Escort Security, told a private news channel. Because investors in many companies have not shown any kind of interest.
In preparation for the closure of these 6 companies
Minister of State for Finance Anurag Singh Thakur said in the last session of Parliament, “Six companies are being considered for closure and the process in the remaining 20 is in various stages.”
Companies being considered for closure include Hindustan Fluorocarbon Limited (HFL), Scooters India, Bharat Pumps and Compressors Limited, Hindustan Prefab, Hindustan Newsprint and Karnataka & Pharmaceuticals Limited.
With this, the strategic sale process has started at Alloy Steel Plant, Durgapur, Salem Steel Plant, SAIL’s Bhadravati Unit, Pawan Hans, Air India and their five subsidiaries and a joint venture.
What will be the benefit of this?
The government believes that having more government companies in the same sector is a waste of money, which it is resorting to privatization policy to reduce. There are many non-essential areas in which government companies do not have to work. That is why the government will privatize some government companies.
How many government companies are there?
There are currently 339 Central Public Sector Enterprises in the country. Of the 257 trading, 179 are scheduled CPSE companies.
What will happen to employees?
Experts say, ‘In such cases most of the companies bring VRS scheme for their employees. In which the remaining time for retirement is given to the employees. A few days ago VRS scheme came up for several companies including BSNL-MTNL.