Privatisation gets mega push in Budget 2021, most ambitious plan since Vajpayee era

Only four sectors will be classified as strategic, CPSEs in other sectors will be privatised. Two banks and one general insurance firm will also be privatised in FY22.

Finance Minister Nirmala Sitharaman during the Budget speech in the Parliament on 1 February 2021. | Photo: ANI

New Delhi: The Narendra Modi government announced its most ambitious plan to privatise central public sector enterprises (CPSEs) during the Union Budget Monday.

The government will maintain a bare minimum presence in only four strategic sectors, Finance Minister Nirmala Sitharaman said in her budget speech. The four sectors are atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; and banking, insurance and financial services.

All CPSEs in other sectors will be privatised, she said, adding that the government has approved the policy that was announced as part of the Atmanirbhar package.

“In four areas, a bare minimum number of firms will be retained and the rest will be privatised. In other sectors, all firms will be privatised,” she said, adding that the policy approved by the government provides a clear roadmap for disinvestment in strategic and non-strategic sectors.

Niti Aayog will work on the next set of public sector enterprises that will be taken up for strategic disinvestment, the FM added.

The firms that will be privatised in 2021-22 include Bharat Petroleum Corp Ltd, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, Bharat Earth Movers Ltd, and Pawan Hans, she said. Most of these firms are in various initial stages of stake sale.

Two public sector banks and one general insurance company will also be taken up for privatisation, Sitharaman said, adding that the amendments to relevant laws for this purpose will be tabled in the current Parliament session.

The initial public offer of Life Insurance Corporation of India will also be completed in 2021-22.

As part of its economic package to combat the pandemic, the government had announced its intent to exit non-strategic sectors as well as reduce its presence in strategic sectors to a maximum of four firms.

In a cabinet note floated last year, the government had proposed a list of 18 sectors that could be classified as strategic. These included sectors like power, banking, insurance, steel, coal, fertiliser, petroleum and defence equipment. The proposal that received the cabinet’s nod last week has now proposed to reduce the number of strategic sectors to four from 18.

The government has budgeted Rs 1.75 lakh crore as receipts from disinvestment for 2021-22, Sitharaman said.

First big privatisation push after Vajpayee term

After first announcing its intent to bring down the Union government’s stake in non-strategic firms to less than 50 per cent in the 1998 budget presented by then finance minister Yashwant Sinha, the Atal Bihari Vajpayee government followed through on this announcement during its 1999-2004 term.

It successfully completed some major strategic sale transactions in firms such as VSNL, BALCO, Hindustan Zinc, Maruti Suzuki and CMC Ltd. But it chose to retain a small stake in Hindustan Zinc and Balco, while completely exiting from Maruti Suzuki.