BJP Government Moves to Privatise 30 PSUs Including Air India

The central government has accelerated efforts to sell out at least 30 central Public Sector Undertakings (PSUs) including national carrier Air India.

The Cabinet Committee for Economic Affairs (CCEA) has given in-principle nod to the sale of shares as per the recommendation of the NITI Aayog.

Air India

In a move that is widely seen as indicative of the intention to expedite privatisation, the Union government on Wednesday allowed foreign airlines to invest in Air India, doing away with earlier restrictions.

As per new rules, foreign airlines would be allowed to invest up to 49% under "Government approval route" in Air India.

“We will be seeking expressions of interest certainly in February,” civil aviation secretary Rajiv Nayan Choubey said according to Mint. Choubey said that the invitation calling for expressions of interest from potential bidders for Air India is being drafted, and that it will be submitted to a ministerial group that has been tasked with the national carrier’s privatisation.

EY, formerly known as Ernst and Young, has been appointed by the government to advise it on the privatisation effort, said the Mint report. “ We will complete the process by June,” an official told The Times of India.

The government move has come even as a Parliamentary panel recommended that the Air India disinvestment decision should be deferred for five years.

The Parliamentary Standing Committee on Transport, Tourism and Culture had said in its draft report that Air India should be given five more years to achieve its turnaround targets, and that the government should write off its debt. The committee reportedly recommended that the government should review its decision to privatise Air India, and that it should explore the possibility of "an alternative to disinvestment of our national carrier which is our national pride".

While the NITI Aayog recommended that the airline should be strategically disinvested, the Parliamentary panel said that it would be lopsided to evaluate Air India solely from a business point of view as the NITI Aayog has done.

National Mineral Development Corporation

The two-day Offer For Sale (OFS) of 2.52 percent government stake in the National Mineral Development Corporation (NMDC), which reported Rs. 2589.14 crore profit in 2016-17, took place on 9 and 10 January. Institutional investors put in bids for over 6.36 crore shares - 1.68 times the 3.79 crore shares reserved for them, while retail investors put in bids for 8.58 crore shares - 5.4 times the 1.59 crore shares reserved for them.

Massive Privatisation on the Anvil

The Modi government is reportedly aiming to collect Rs. 55,000 crore through PSU stock sales in the financial year 2018-19.

The centre has collected Rs. 52,500 crore this year so far through PSU stock sales. The target for the 2017-18 financial year is Rs. 72,500 crore.

The Finance Ministry has drawn up plans for strategic disinvestment of six PSUs including Air India, Dredging Corporation of India, and Indian Medicines Pharmaceuticals Limited, while the shares of several other PSUs such as IRCTC, IRCON Ltd, Mishra Dhatu Nigam and Mazagon Dock Ltd are to be put up for sale in the markets through initial and further public offering.

"The Bharat-22 exchange traded fund, which helped the Centre raise nearly Rs. 14,500, is also an option for 2018-19," said a report in The Hindu Business Line. The Centre's disinvestment roadmap would be announced by Finance Minister Arun Jaitley in the Union Budget on February 1, the newspaper said.

According to an answer given by Pon Radhakrishnan, Minister of State for Finance, in the Rajya Sabha, the government has so far given ‘in-principle’ approval for the strategic disinvestment of 24 central PSUs or their units. These are as follows:

Scooters India Ltd, Bridge & Roof India Ltd, Project & Development India Ltd, Pawan Hans Ltd, Bharat Pumps Compressors Ltd, Central Electronics Ltd, Hindustan Prefab Ltd, Bharat Earth Movers Ltd, Hindustan Newsprint Ltd (subsidiary), Ferro Scrap Nigam Ltd (subsidiary), Hindustan Fluorocarbon Ltd (subsidiary), Cement Corporation of India Ltd, Nagarnar Steel Plant of NMDC, Bhadrawati, Salem and Durgapur units of SAIL, HSCC (India) Ltd, National Projects Construction Corporation (NPCC), Engineering Projects (India) Ltd, Air India, Dredging Corporation of India Ltd, HLL Lifecare Ltd, Indian Medicines & Pharmaceutical Corporation Ltd, Karnataka Antibiotics and Pharmaceuticals Ltd, Hindustan Petroleum Corporation Ltd, and the Units / JVs of ITDC.

The government has deferred the strategic disinvestment of BEML, a Defence PSU which had also come under the threat of privatisation.