India Development News & Foreign Investment Opportunities

Strategic disinvestment of select CPSEs a priority

Govt considers below 51% stake


Govt considers below 51% stake

Air India Plane
Priority privatisation. Air India on offer. Government considering less than 51% stake on case-by-case basis.

Strategic disinvestment of select CPSEs will continue to remain a priority of the Government, retaining less than 51% stake under a modified policy, said Finance and Corporate Affairs Minister, Nirmala Sitharaman while presenting Union Budget 2019-20 in Parliament on 5 July 2019.

In view of current macro-economic parameters, the Government will not only reinitiate the process of strategic disinvestment of Air India but will offer more CPSEs for strategic participation by the private sector, said Sitharaman.

The Government will undertake strategic sale of Public Sector Units (PSUs) and will also continue to do consolidation of PSUs in the non-financial space as well.

The Finance Minister said that Government is considering, to go below 51% to an appropriate level, on case to case basis, in case where the Undertaking is still to be retained in Government control.

The Government has also decided to modify present policy of retaining 51% stake inclusive of the stake of Government controlled institutions.

She said that Government intends to further encourage retail participation in CPSEs which, of late, has shown very encouraging upward trend.

In order to provide additional investment space, the Government will realign its holding in CPSEs, including Banks to permit greater availability of its shares and to improve depth of its market.

ETFs have proved to be an important investment opportunity for retail investors and has turned out to be a good instrument for Government of India’s divestment programme.

To expand this further, Government will offer an investment option in ETFs on the lines of Equity Linked Savings Scheme (ELSS).

This will also encourage long term investment in CPSEs, the Minister said.

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