Hyderabad: Despite repeated calls for reducing the government’s ownership of businesses, the Narendra Modi-led government has ended up floating more Central Public Sector Enterprises (CPSEs) between 2014 and 2018.
According to the Department of Public Enterprise (DPE) data, there are 339 CPSEs — excluding insurance companies — as on March 31, 2018 compared to 290 CPSEs on March 31, 2014. In the four years, the BJP government has set up 49 more central government-owned companies.
The increase in CPSEs runs counter to the widely prevalent perception of Prime Minister Narendra Modi being a believer in the concept of less government and more governance. “Government has no business to be in business,” Mr Modi said in October 2015, a few months after he took over power. However, the role of the government in business has only increased.
Though the consistent disinvestment policy of successive governments has been to shed the management control of public sector units either by selling the companies to private sector entities or by bringing down the government stake to less than 50 per cent, the Modi government did not match the success of the Atal Behari Vajpayee government on this front.
While the Vajpayee government managed to bring down the government stake to less than 50 per cent in many companies, data available on BSE indicates that the Modi government has been following the cautious approach adopted by the Left-leaning UPA governments by selling stake in single-digit percentages.
The Centre has raised Rs 1,36,018 crore from 2014 to 2019 by selling minority stakes in 41 public sector companies, which include Navratna PSUs as well as others. But it did not sell any PSU to a private company. From 1998 to 2004, the Vajpayee government had sold 14 CPSEs and 19 hotels to private entities.
The BSE data also shows that the big-ticket stake sale under the Modi government has been to exchange traded funds. While a CPSE buying another CPSE amounts to the transfer of cash from one hand to another, ETFs do not involve ending inefficient government-led management systems at CPSEs—both of which paint the current policy preference as status quoist.
The Modi government raised Rs 82,448 crore from Bharat 22 ETFs and CPSE ETFs from 2014 to November 2019. It also raised Rs 52,829 crore by way of imperfect disinvestment of selling the government’s stake in a CPSE to another CPSE.
The government has also raised Rs 18,300 crore by selling partial stake that erstwhile UTI had in some blue-chip companies.
In July this year, however, Minister of State for Finance Anurag Thakur informed the Lok Sabha that the government has given an in-principle nod for the strategic disinvestment of 23 CPSEs.
