The Union Cabinet headed by Prime Minister Narendra Modi has approved a new process of strategic disinvestment. Under the new process, the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance has been made the nodal department for the strategic stake sale. This was done with a view to streamlining and speeding up the process, reducing the role of administrative ministries which often used to place hurdles in the path of major stake sales.
While currently public sector units (PSUs) for strategic sale are identified by NITI Aayog, the tweak in policy has now brought DIPAM into the picture. DIPAM and NITI Aayog will now jointly identify PSUs for strategic disinvestment. Also, DIPAM secretary would now co-chair the inter-minister group on disinvestment, along with the secretary of administrative ministries concerned. Strategic sale may involve two-stage bidding beginning with an expression of interest (EoI) or a preliminary intent showing bid, and a final financial bid. Pre-bid meetings with likely bidders and roadshows to attract potential investors will form part of the process to provide clarity on every aspect of the stake sale. Also, data centre will be set up for bidders to look for information on the PSUs up for sale. The idea is to complete the stake sale within a timeframe, say 4-5 months.
The government has set a target of mobalising Rs 1.05 lakh crore for the current financial year (FY20) from disinvestment proceeds and achieving this has become more critical after it doled out Rs 1.45 lakh crore stimulus by way of a cut in corporate tax. Disinvestment proceeds will be critical for the government to stick to its target of keeping fiscal deficit at 3.3 percent of the Gross Domestic Product (GDP) in the current fiscal year ending March 31, 2020.
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