What is strategic about disinvestment?
ECONOMY & POLICY

What is strategic about disinvestment?

It worries him when the government decides to identify a list of “strategic sectors” for the newly cleared disinvestment policy, Pratap Padode says.

_____________

The top 10 profit-making public-sector enterprises (PSEs) (See Table 1) made an aggregate net profit of Rs 1.8 trillion during 2018-19. The other 168 profit-making PSEs made an aggregate total net profit of Rs 66.64 billion. So, 62% of the profits came from just 10 PSEs from the 178 profit making enterprises.

No surprises there to also learn that all 10 of them are from the energy sector). Of the 70 loss-making PSEs, just 10 of them contributed 94% of the total losses of Rs 31.64 billion (See Table 2). The balance 60 contributed a loss of Rs 1.89 billion.

Total investment in the PSEs contributed during 2018-19 was Rs 2.09 trillion. It is amply clear that mining and exploration businesses or the energy related businesses gave a return of 19.98% while the aggregate return from all sectors was 12.11% during 2018-19.

The disinvestment policy that received clearance recently has identified a list of strategic sectors requiring presence of PSEs in public interest where at least one enterprise will remain in the public sector, but private sector will also be allowed. The disinvestment targets for the current year 2020-21 seem to be way off the realisation (See Table 3).

Given the market conditions, with BSE volumes touching trades equivalent to $2.7 trillion and Sensex swinging around kissing distance of 50,000 while it tottered at 29,468 last year during March 2020, divestment needs to take a more proactive role in shoring finances for COVD hit fiscal deficit. Around 2003, during the Economic Editors’ conference I asked the then Finance Minister Yashwant Sinha, “If the job of the Government is to provide an enabling environment for business and commerce to flourish and not be in the business of business, how does the decision of holding onto ITDC Hotels make sense for the government?” Sinha was a tad annoyed and retorted that the government can remain in businesses that it can contribute to. Since then, ITDC has been shedding hotels and its divestment plan now is in a firmer position.

So, when the government decides to identify a list of “strategic sectors”, I am worried.

Image source

Also read: BPCL divestment bidding to become competitive

Read more here

Author: Pratap Padode is Editor-in-Chief, Construction World, & Founder, FIRST Construction Council.

____________________________________________

4th Indian Cement Review Conference 2021

17-18 March 

Click for event info


Make in Steel 2021

24 February 

Click for event info

It worries him when the government decides to identify a list of “strategic sectors” for the newly cleared disinvestment policy, Pratap Padode says. _____________The top 10 profit-making public-sector enterprises (PSEs) (See Table 1) made an aggregate net profit of Rs 1.8 trillion during 2018-19. The other 168 profit-making PSEs made an aggregate total net profit of Rs 66.64 billion. So, 62% of the profits came from just 10 PSEs from the 178 profit making enterprises. No surprises there to also learn that all 10 of them are from the energy sector). Of the 70 loss-making PSEs, just 10 of them contributed 94% of the total losses of Rs 31.64 billion (See Table 2). The balance 60 contributed a loss of Rs 1.89 billion. Total investment in the PSEs contributed during 2018-19 was Rs 2.09 trillion. It is amply clear that mining and exploration businesses or the energy related businesses gave a return of 19.98% while the aggregate return from all sectors was 12.11% during 2018-19. The disinvestment policy that received clearance recently has identified a list of strategic sectors requiring presence of PSEs in public interest where at least one enterprise will remain in the public sector, but private sector will also be allowed. The disinvestment targets for the current year 2020-21 seem to be way off the realisation (See Table 3). Given the market conditions, with BSE volumes touching trades equivalent to $2.7 trillion and Sensex swinging around kissing distance of 50,000 while it tottered at 29,468 last year during March 2020, divestment needs to take a more proactive role in shoring finances for COVD hit fiscal deficit. Around 2003, during the Economic Editors’ conference I asked the then Finance Minister Yashwant Sinha, “If the job of the Government is to provide an enabling environment for business and commerce to flourish and not be in the business of business, how does the decision of holding onto ITDC Hotels make sense for the government?” Sinha was a tad annoyed and retorted that the government can remain in businesses that it can contribute to. Since then, ITDC has been shedding hotels and its divestment plan now is in a firmer position. So, when the government decides to identify a list of “strategic sectors”, I am worried.Image sourceAlso read: BPCL divestment bidding to become competitiveRead more hereAuthor: Pratap Padode is Editor-in-Chief, Construction World, & Founder, FIRST Construction Council.____________________________________________4th Indian Cement Review Conference 202117-18 March Click for event infoMake in Steel 202124 February Click for event info

Next Story
Resources

Ajmera Realty launches tree drive on Environment Day

Ajmera Realty & Infra India marked World Environment Day with a large-scale tree plantation initiative—Plant-with-Purpose—across its projects in Mumbai and Bangalore. The drive was inaugurated at Ajmera Manhattan and Ajmera Greenfinity in Wadala, with senior company officials and residents in attendance. The campaign encourages residents to embrace eco-conscious, self-reliant lifestyles by growing useful plants and trees within their communities. Horticulture expert Devendra Bhekar guided residents on creating and maintaining green spaces. Ajmera Realty planted over 500 trees..

Next Story
Resources

Twaron®-reinforced tyre powers Brunel’s solar race car

Teijin Aramid’s Twaron® with circular content will debut in Bridgestone’s race tyres for the 2025 Bridgestone World Solar Challenge, supporting the Brunel Solar Team’s Nuna 13 car. This marks the first use of the recycled-content aramid in a high-performance race tyre. The Twaron®-reinforced belts help enhance durability, reduce rolling resistance, and maintain lightweight strength—critical for the 3,000-km solar race across Australia. Bridgestone combines this with ENLITENTM tech and other recycled inputs to maximise environmental and performance outcomes. Teijin Aramid, a..

Next Story
Building Material

Kamdhenu Paints launches new wood coating range

Kamdhenu Paints has launched a comprehensive premium wood coating range designed for both interior and exterior applications. The collection includes high-performance solutions like Kamwood 2K PU for a rich matt or high-gloss finish, Kamwood 1K PU for clarity and stain protection, and the Kamwood Melamyne system for a smooth, durable finish. Also featured are Kamwood Wood Stains, which enhance wood grains with vibrant colour, and NC Sanding Sealer for high-build grain filling. The range is supported by Kamwood Thinners for ease of application and optimal finish. Saurabh Agarwal, MD, ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?