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Government to consider the closure PSUs approved for strategic disinvestment

Centre's disinvestment plans have been severely impacted by the ongoing pandemic

Posted : 20 September, 2020
Author : Admin
Government to consider the closure PSUs approved for strategic disinvestment

n a written reply to a question in the Lok Sabha, Minister of State for Finance Anurag Thakur said that the government follows a policy of closure of central public sector enterprises (CPSEs) in terms of the approved revised guidelines dated June 14, 2018, issued by the Department of Public Enterprises (DPE).

"The government may consider the closure of the CPSEs even in cases earlier approved for strategic disinvestment on a case to case basis," Thakur said, adding that the guidelines issued by the DPE on the closure of CPSEs address the concerns regarding the employees and assets.


Thakur noted that the government has given `in-principle` approval for strategic disinvestment of 34 CPSEs, including subsidiaries and units of CPSEs.

Several of these CPSEs are loss-making and sick entities where the government in the past had also faced difficulties in strategic disinvestment. Such companies which have lost value could be the ones that may be recommended for closure.

In certain other CPSEs, the policy of minority stake sale without transfer of management control through various SEBI approved methods is being followed in order to unlock the value, promote public ownership and a higher degree of accountability, he said.


The various modes of disinvestment commonly used for minority stake sale include Initial Public Offer (IPO), Follow on Public Offer (FPO), Offer for Sale (OFS), buyback of shares and Exchange Traded Funds (ETF).

"Transaction receipts on the conclusion of disinvestment transactions depend on the prevailing market conditions and investors` interest," the minister said.

The budget estimate (BE) of disinvestment receipts for 2020-21 from disinvestment of CPSEs was fixed at Rs 1.20 lakh crore.

The already lagging disinvestment plans have been severely impacted by the ongoing pandemic and deadlines for submission of bids major PSUs on the block, such as oil major BPCL and national carrier Air India have been postponed.

The government is also coming up with a new strategic disinvestment policy as announced by the Finance Minister in May. According to sources, the Cabinet may soon take up and approve the new strategic disinvestment policy, which would include the banking and insurance sector.