INSUBCONTINENT EXCLUSIVE:
sector undertaking (PSU) even if the government holding falls below 51 per cent.In an interview with IANS, Finance Secretary Subhash Chandra
Garg indicated that the government may consider amending laws that will allow an entity to retain the PSE tag even in case the government
holding below 51 per cent."As per definition of a PSU company, the central government and the state government together have to have 51 per
If that comes down, it changes the character of the government company
Logically we can change that" Mr Garg said.Though, the Finance Ministry is still to take a view on the issue, sources have indicated that
the PSU definition could be maintained with government holding of say 40 per cent, or 26 per cent in case of certain non-strategic entities
This will not only give flexibility to boards of PSUs in decision-making but also allow more room for the centre to raise additional revenue
from disinvestment.Moreover, the Finance Ministry may also convert a few PSUs into board-driven widely held private entities such as L-T
Mr Garg has indicated that this route may also be followed on a case-to-case basis."When this decision is taken (to lower government
holding), the government will also consciously decide whether that particular company needs to bear the tag of a government company or not,"
Mr Garg said.Under present definition, central public sector enterprises (CPSEs) are companies in which the direct holding of the central
government or other CPSEs is 51 per cent or more
Even with lower shareholding of say 40 per cent, the centre will be the largest shareholder especially in companies such NTPC, Powergrid,
BHEL, where public shareholding is already very high.The changes will also facilitate consolidation among the PSUs.For example, Power
Finance Corporation (PFC) that has bought the entire government equity in REC, now wants to merge the entity with itself
This exercise, however, will bring down government shareholding in the merged entity to just about 42-43 per cent taking the company outside
If the threshold of government holding is reduced, such consolidation will be promoted without companies fearing the loss of their PSU
identity."The current decision is that unless we put an entity into strategic disinvestment route, the government should hold 51 per
cent.""Now, the government is saying two things
One, on a case-to-case basis, the centre can decide to lower its stake more than 51 per cent
If government decides to keep 51 per cent stake, it will take into account the combined holding of the government and government-controlled
This will allow more space to the centre to the extent of the shares that are held by other institutions," Mr Garg said."The second is
initiating public-private partnership projects (PPP) as has been proposed in the Budget for the railways
We will have to get private investment in several areas," he added.If the PSU definition is changed, it would be easier for the government
to mobilise funds even if markets are choppy as PSUs could be asked to buy back government shares
If markets are good, a higher number of government shares in PSUs can be offered at a premium.Get Breaking news, live coverage, and Latest
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