Cabinet Committee of Economic Affairs clears public sector enterprises policy: Sources


NEW DELHI: The Cabinet Committee of Economic Affairs has cleared the public sector enterprises (PSE) policy, said sources aware of the development, on Wednesday.

The government had first mooted an overhauled PSE policy in the Aatmanirbhar Bharat Abhiyan mid last year, which aims to keep not more than four central public sector enterprises in strategic sectors and open up all other sectors for privatisation.

After several consultations with ministries, about 18 strategic sectors have been identified for disinvestment purposes including coal, crude oil, power, steel, telecom, atomic energy and defence, sources said.


Under the manufacturing sector, steel, fertiliser, atomic energy, petroleum refining and marketing, defence, ship building and power generation have been identified as critical sectors requiring large presence of PSUs. In the rest of the sectors, the government will eventually move out clearing roads for private participation.

The government had earlier proposed disinvestment in all other commercial entities except development and regulatory bodies, trusts, not for profit companies, refinancing institutions and companies formed under acts of Parliament. Similarly, railways, ports that undertake commercial operations with development mandate will also not fall under the disinvestment agenda, sources added.

Services like power transmission, gas transportation, space, telecom, information and technology, infrastructure finance companies, banking and insurance companies and development of airports, ports and highways have also been categorised as strategic sectors for PSU presence.


According to the Public Sector Enterprise Survey 2018-19, which is the latest available, there are in all 257 central PSEs (CPSEs) of which 184 were profit-making enterprises. Of these, there are 43 CPSEs in technical consultancy services, 36 in heavy and medium engineering sector, and 23 in transport and logistics, as per EY.

Department of economic affairs secretary Tarun Bajaj had said recently that the PSE policy would be more “ambitious” than anticipated and will bring about a paradigm change in the government working.

Having a robust disinvestment policy would be critical for the government at a time when it needs resources to bridge the fiscal gap and for spending on key policy initiatives to battle Covid-19 pandemic affected economy, several economists have noted.

For the financial year ending March 31, 2021, the government had set a disinvestment target of Rs 2.1 lakh crore, of which Rs 1.2 lakh crore is expected from strategic divestments.

The government is pursuing the privatisation of state-run companies such as BPCL, Container Corporation of India, Shipping Corporation of India, Air India and public listing of the largest insurer LIC of India, but it appears unlikely that the reported disinvestment in most of the above entities would be achievable within this fiscal.

“With less than three months left in this fiscal, the disinvestment inflows are unlikely to cross Rs 0.4 trillion in FY2021 in our view,” ICRA has said in a report.

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