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Disinvestment of 23 PSUs

The Topic covers GS paper 3 [Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.]



  • The government is working on completing the stake sale process of about 23 public sector companies whose divestment has already been cleared by the Cabinet, Finance Minister Nirmala Sitharaman said.

  • The minister also said she would soon meet small finance firms and non-banking finance companies (NBFCs) to review the credit being extended by them to businesses.

What is the Background?

  • The minister said the government wants to sell stake in public sector companies at a time when it fetches the right price. 

  • For the 2020-21 fiscal, the government has set a disinvestment target of Rs 2.10 lakh crore. 

  • Of this, Rs 1.20 lakh crore will come from disinvestment of public sector undertakings and another Rs 90,000 crore from stake sale in financial institutions. 

What are the disinvestment plans?

  • Among the units that will go down the hammer include: Project & Development India Ltd, Hindustan Prefab Limited (HPL), Engineering Project (India) Ltd, Bridge and Roof Co. India Ltd., Pawan Hans Ltd., Hindustan Newsprint Ltd (subsidiary), Scooters India Limited, Bharat Pumps & Compressors Ltd, Hindustan Fluorocarbon Ltd. (HFL) (sub.),Central Electronics Ltd, Bharat Earth Movers Ltd. (BEML),Ferro Scrap Nigam Ltd.(sub.), Cement Corporation of India Ltd (CCI), Nagamar Steel Plant of NMDC and Alloy Steel Plant, Durgapur of SAIL.

  • Strategic disinvestment has been guided by the basic economic principle that the government should not be in the business to engage itself in manufacturing/producing goods and services in sectors where competitive markets have come of age, and economic potential of such entities may be better discovered in the hands of the strategic investors due to various factors, e.g. infusion of capital, technology up-gradation and efficient management practices.

  • In disposing off five entities -- HPCL, REC, NPCC, HSCC and DCIL -- in last two years, the government did not make profitability a criteria.

  • The DIPAM (Department of Investment and Public Asset Management) has already set the ball rolling on the disinvestment process for BPCL, its subsidiary NRL, SCI, CONCOR, Air India, LIC, and a bunch of other minority stake sales. 

  • The sale THDC and NEEPCO to NTPC Limited has already been concluded in the previous financial year.

What is the way forward?

  • The Finance Minister said that the consolidation of PSUs, as well as scaling up of their operations, is in the offing.

  • With the purpose of extending credit to the industry, Finance Minister Nirmala Sitharaman mentioned that under the Emergency Credit Line Guarantee Scheme, micro, small and medium enterprises can easily avail loans.

  • The total amount sanctioned, as of July 23, 2020, under the 100% Emergency Credit Line Guarantee Scheme by the private and public sector banks stands at Rs. 1,30,491.79 crore, out of which Rs. 82,065.01 crores has already been disbursed. 

  • The union minister has also asked the banks to facilitate the process, as the government has taken the risk on itself.


During the past two years, the government has disinvested five CPSEs including Hindustan Petroleum Corporation Limited (HPCL), Rural Electrification Corporation Limited (REC), National Projects Construction Corporation Ltd (NPCC), Hospital Services Consultancy Corporation Limited (HSCC) and Dredging Corporation of India Limited (DCIL).

During March this year, the government had accorded approval for Strategic Disinvestment of 100% Government of India (GOI) shares in DCIL in favor of consortium of 4 ports, namely, Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust (formerly known as Kandla Port Trust). The share purchase agreement was executed between GoI and the four ports on March 8, 2019. With this, the 73.47% holding of GoI in DCIL had been transferred to the four ports as under these trusts. Through this strategic sale, the Centre has mobilized a total amount of Rs 1,049 crore.