Union Finance Minister Nirmala Sitharaman. (Image: PTI)
To ease the way for disinvestment, the government has transferred the Department of Public Enterprises under the Ministry of Finance
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- Last Update: 8 July 2021, 7:55 pm IS
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The Department of Public Enterprises (DPE) is now the sixth vertical within the Ministry of Finance, following a split from its parent ministry, the Ministry of Heavy Industries and Public Enterprises, prior to the major cabinet reshuffle. Narendra Modi Government at the Centre. The transfer of the department is being seen as part of steps to help the Center achieve its disinvestment target. Here’s what you need to know.
What changes with this merger?
According to reports, the allocation of DPE to the Finance Ministry has been done to achieve better control and evaluation of state-owned firms. The Modi government aims to review the capital expenditure plans of Central Public Sector Enterprises (CPSEs) and formulate strategies to revive or sell them.
With the DPE coming under its wing, the Ministry of Finance now comprises six departments, Economic Affairs, Revenue, Expenditure, Investment and Public Asset Management and Financial Services, with the other five departments.
On the other hand, the Ministry of Heavy Industries and Public Enterprises, under which DPE was functioning till now, will now be known simply as the Ministry of Heavy Industries.
How many CPSEs are there in India?
According to the Public Enterprises Survey for 2018-19 tabled in Parliament last year, there were a total of 348 CPSEs as of March 2019, out of which 249 were operational. Out of the remaining 86 CPSEs were under construction and 13 CPSEs were under closure or liquidation.
The survey said there were 178 profit making CPSEs, whose profit stood at Rs 1.74 lakh crore during 2018-19, a growth of nearly 12 per cent over the previous fiscal.
What is the government’s disinvestment roadmap?
Presenting the 2021 Budget in Parliament, Finance Minister Nirmala Sitharaman had announced that the Center wants to raise Rs 1.75 lakh crore in this fiscal through the sale of its stake in PSUs and financial institutions.
Of the total target, the Center intends to earn up to Rs 1 lakh crore by selling its stake in public sector banks and financial institutions, while the remaining Rs 75,000 crore is expected to come from CPSE disinvestment proceeds.
Sitharaman had said that strategic disinvestment in BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Limited etc. will be completed in the financial year 2021-22.
The Center has also decided to start an initial public offering (IPO) for Life Insurance Corporation of India (LIC) and the balance stake sale in IDBI Bank this financial year.
How will CPSEs be identified for disinvestment?
The Center has identified four strategic areas – nuclear energy; space and defense; transport and telecommunications; electricity, petroleum, coal and other minerals; and banking, insurance and financial services – where the minimum number of CPSEs will be retained. All other sector CPSEs will either be privatized or merged with other CPSEs or will be closed.
The Center has said that NITI Aayog has been tasked to come out with a list of CPSEs that would be taken up for strategic disinvestment. In addition, the Narendra Modi government aims to encourage states to disinvest their public sector companies.
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