The Department of Public Enterprises (DPE) is now the sixth vertical within the Ministry of Finance after it was unhitched from its parent ministry, the Heavy Industries and Public Enterprises Ministry, ahead of the big Cabinet reshuffle undertaken by the Narendra Modi government at the Centre. The shifting of the department is being seen as part of the moves to help the Centre achieve its disinvestment target.
Here’s what you need to know.
What changes with this merger?
According to reports, the allotment of DPE to the finance ministry has been done with an eye on achieving better control and assessment of State-owned firms. The Modi government aims to undertake a review of capital expenditure plans of the central public sector enterprises (CPSEs) and draw up strategies for reviving, or selling them.
With DPE coming under its wings, the finance ministry now comprises six departments, economic affairs, revenue, expenditure, investment and public asset management and financial services, being the other five.
On the other hand, the Ministry of Heavy Industries and Public Enterprises, under which DPE was hitherto functioning, will now be known as only the Ministry of Heavy Industries.
How many CPSEs are there in India?
According to the Public Enterprises Survey for 2018-19 that was tabled last year in Parliament, there were a total of 348 CPSEs till March 2019 of which 249 were operational. Of the rest, 86 CPSEs were under construction and 13 CPSEs were shuttered or under liquidation.
The survey said there were 178 profit-making CPSEs, whose profits stood at Rs 1.74 lakh crore during 2018-19, a growth of close to 12 percent over the previous fiscal.
What is the Centre’s disinvestment roadmap?
Presenting the 2021 Budget in Parliament, finance minister Nirmala Sitharaman had announced that the Centre is looking to raise Rs 1.75 lakh crore in this fiscal through the sale of its stake in PSEs and financial institutions.
Of the total target, the Centre intends to earn up to Rs 1 lakh crore by selling its stake in public sector banks and financial institutions while CPSE disinvestment receipts are expected to yield the remaining Rs 75,000 crore.
Sitharaman had said that strategic disinvestment would be completed in the 2021-22 fiscal in BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Ltd, etc.
The Centre has also decided to launch an initial public offering (IPO) for the Life Insurance Corporation of India (LIC) and residual stake sale in IDBI Bank in this fiscal.
How will CPSEs for disinvestment be identified?
The Centre has identified four strategic sectors, atomic energy; space and defence; transport and telecommunications; power, petroleum, coal and other minerals; and banking, insurance and financial services, where a bare minimum number of CPSEs will be retained. CPSEs in all other sectors will either be privatised or merged with other CPSEs or closed.
The Centre has said that the NITI Aayog has been tasked with coming up with the list of CPSEs that would be taken up for strategic disinvestment.
Further, the Narendra Modi government also aims to incentivise states to undertake disinvestment of their public sector companies.