The Centre has ruled out diluting the list of public sector enterprises lined up for strategic sale, according to a report by The Times of India (TOI). The decision comes amid repeated demands from the heavy industries, fertiliser and housing ministries for a review. The report said the government has already raised upwards of Rs 60,000 crore from disinvestment and is on course to beat the Rs 80,000 crore target.
Ministries press for review, Centre pushes back
Over the last few months, the government engaged in an extensive exercise reviewing the list of PSUs identified for privatisation, listing and closure, with the Prime Minister's Office involved, TOI reported. Individual ministries have managed to get several PSUs originally on the sell-off list — such as BPCL and Shipping Corp — out of the government's scheme. However, multiple officials told TOI that there is little possibility of further dilution.
The report added that several government departments have started turning inter-ministerial meetings into a forum for seeking a review, with some repeatedly approaching Niti Aayog and other agencies suggesting a review. The message from the top is clear: all ministries have to work together to achieve the goal of strategic sale, especially when the government is keen to maximise revenue and send a message that it is serious about the exercise.
A haphazard privatisation record
Despite the government's commitment to disinvestment, the process has become haphazard over the years, with no centralised list in place, according to TOI. Companies pursued for privatisation were also lost on the way, be it BEML or Shipping Corp. Even now, just one entity — IDBI Bank — is sought to be privatised.
| Privatisation pipeline | Status per TOI |
|---|---|
| Disinvestment raised so far | Upwards of Rs 60,000 crore |
| FY target | Rs 80,000 crore |
| Active privatisation target | IDBI Bank |
| Further strategic sale cases | To be identified after IDBI Bank deal closes |
IDBI Bank privatisation draws Fairfax, Emirates NBD
All eyes are on IDBI Bank, with Prem Vatsa-owned Fairfax and Emirates NBD being the two bidders in the fray, TOI reported. Both have investments in Indian banks — Catholic Syrian Bank and RBL, respectively — and are keen to be part of the exercise. For either, the Reserve Bank of India will have to step in and provide some exemption to facilitate running two banking entities in the country.
| Bidder | Existing Indian bank investment |
|---|---|
| Fairfax (Prem Vatsa-owned) | Catholic Syrian Bank |
| Emirates NBD | RBL |
Next milestones for strategic sales
Officials indicated that given the current emphasis on offer-for-sale and initial public offers, strategic sale cases will be identified once the IDBI Bank deal closes, according to TOI. With the government in the third year of its current term, it will have to move quickly so that more transactions can be pursued. The Centre has already raised upwards of Rs 60,000 crore from disinvestment, and with the IDBI Bank sale — if it materialises this time — and other small stake sales lined up, it is on course to beat the Rs 80,000 crore target.
For corporate strategy teams and M&A advisors tracking Indian state privatisation, the report signals that the immediate transaction pipeline hinges on IDBI Bank's closure. Until then, the government's stated commitment to strategic sales is balanced against a targeted disinvestment programme that, with the Centre having raised upwards of Rs 60,000 crore, leaves a remaining gap of under Rs 20,000 crore to the Rs 80,000 crore goal.
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