Minister of State for Finance and Corporate Affairs Anurag Thakur informed the Lok Sabha that ‘in principle’ the Cabinet Committee on Economic Affairs (CCEA), had approved the strategic disinvestment of certain central public sector enterprises (CPSEs). Air India and Pawan Hans Ltd are among the 28 CPSEs that will be disinvested.
He said that for achieving disinvestment targets, the government uses various methods such as Initial Public Offer (IPO), Offer For Sale (OFS), buyback of shares, strategic Disinvestment and Exchange Traded Funds (ETF).
“The execution and outcome of disinvestment transactions are dependent on the prevailing market conditions and investor interest,” the Minister added.
MoS Thakur further said in a written note that the budget target for disinvestment for 2019-20 has been set at Rs 1,05,000 crore and the government has so far raised Rs 17,364.26 crore.
The government is following the policy of strategic disinvestment, which is driven by the economic principle that the government should not continue in business in sectors, where competitive markets have come of age and economic potential of such entities may be better discovered in the hands of strategic investors due to factors such as infusion of capital, technological upgrading, and efficient management practices.
“Profitability of CPSEs is not the criteria for selection of CPSE for this purpose (disinvestment). Besides, in certain other CPSEs, which also include profit-making CPSEs, a policy of minority stake sale without transfer of management control through various SEBI approved methods is also being followed,” added Minister Thakur.