From UPSC perspective, the following things are important :
Prelims level : Disinvestment
Mains level : Current disinvestment India - challenges
The Cabinet Committee on Economic Affairs (CCEA) approved the strategic disinvestment of five public sector enterprises – Bharat Petroleum Corporation Ltd (BPCL), Container Corporation of India Ltd, Shipping Corporation of India, Tehri Hydro Power Development Corporation (THDC) and the North Eastern Electric Power Corporation (NEEPCO).
- 1.05 lakh cr – The proceeds from the stake sales will help the Centre move closer to achieving its disinvestment target of Rs 1.05 lakh crore for this year.
- Disinvestment so far – only Rs 17,364 crore or 16.5% of its budgeted disinvestment target is met, as per data from the Department of Investment and Public Asset Management(DIPAM).
- Revenue shortfall – Centre is facing huge shortfalls in both direct and indirect tax revenues. Its gross tax revenues have grown by 1.5% in the first half (April to September) of the current financial year.
- BPCL – Of the five companies, the stake sale in BPCL is likely to be the biggest. The sale will be of interest to both domestic firms and major international players.
- The government could fetch around Rs 63,000 crore from its stake sale in the company.
- Adding proceeds from the sale in the Container Corporation and the Shipping Corporation, Centre may earn more than Rs 70,000 crore through these three firms alone.
- Less time – With only four months to go, the stake sales may not be wrapped up by the end of the financial year.
- Other PSU buying – It should not be another case of public sector firms stepping in to buy these entities to bail out the government.
- Transfer of assets – The sale of THDCIL and NEEPCO to NTPC, is essentially a transfer of assets between various arms of the public sector.
- Plan – The government should draw a more ambitious, better laid out, medium-term plan for disinvestment.
- Not for revenues – It should not be approached as merely an arrangement for plugging its revenue gaps.
- Calendar – It should draw up a list of potential candidates and release an advance calendar, indicating the period of disinvestment. This would help draw in more buyers.
- Use of proceeds – should be only for the creation of new assets, not to meet its revenue expenditure.