Lok Sabha Question No. 272 (STARRED), answered on 2021-03-15
Subject: Privatisation of PSUs
Ministry: FINANCE
Asked by: Balashowry Vallabbhaneni

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF INVESTMENT AND PUBLIC ASSET MANAGEMENT

## LOK SABHA STARRED QUESTION NO. *272 (PRIORITY NO. 12)

TO BE ANSWERED ON MONDAY, MARCH 15, 2021 PHALGUNA 24, 1942 (SAKA)

## Privatisation of PSUs

## *272.  Shri Balashowry Vallabhaneni

Will the Minister of Finance be pleased to state:

- (a) the  plan  of  the  Government  to  accrue  Rs.  1.75  lakh  crores  through  disinvestment  in  the coming fiscal;
- (b) the aims and objectives to privatise the Public Sector Undertakings (PSUs) in the country;
- (c) whether some of the PSUs are incurring losses and if so, the reasons therefor;
- (d) the factors responsible for the losses incurred by the Rashtriya Ispat Nigam Limited (RINL); and
- (e) whether the Government proposes to extend handholding to RINL to come out of losses and if not, the reasons therefor?

## ANSWER

## THE MINISTER OF FINANCE (SMT. NIRMALA SITHARAMAN)

- (a) to (e) : A statement is laid on the table of the House.

## STATEMENT REFERRED TO IN REPLY TO PART (a) to (e) OF THE LOK SABHA STARRED  QUESTION  NO.  *272  TO  BE  ANSWERED  ON  15 TH   MARCH,  2021 REGARDING " PRIVATISATION OF PSUS".

(a): The Budget Estimate (BE) for disinvestment receipt in 2021-22 is Rs 1.75 lakh crore which includes  strategic  disinvestment/privatization  and  minority  stake  sale  in  CPSEs  and  Public financial institutions.

(b) : The  policy  of  privatization  of  PSEs  is  based  on  the  economic  rationale  of  improving productivity  of  the  assets  through  infusion  of  private  capital,  technology,  innovation  and  best management  practices.  Post-disinvestment  growth  of  PSEs  may  generate  higher  economic activities resulting in new job opportunities and growth of the ancillary industries, resulting in overall  economic  growth  and  employment  in  the  country.  The  resources  unlocked  from privatization would be used to finance various social sector/ developmental programmes of the Government, which shall benefit the public.  Profit or loss is not among the relevant criteria for privatization.

(c): As per the Department of Public Enterprises, 84 Central Public Sector Enterprises (CPSEs), including parent companies and subsidiarieshave incurred losses during 2019-20. The reasons for losses/sickness in CPSEs vary from enterprise to enterprise. However, some common problems for  loss/sickness  in  CPSEs  include  lack  of  adequate  capital,  obsolete  plant  and  machinery, outdated  technology,  low  capacity  utilization,  low  productivity,  poor  debt-equity  structure, excess  manpower,  weak  marketing  strategies,  inability  to  face  market  competition,  lack  of innovation, and excessive dependence on Government orders.

(d): Major  factors  for  losses  incurred  by  RINL,  inter-alia,  are  higher  direct  and  indirect  costs, high debt servicing, lower productivity, and lower capacity utilization.

(e): Keeping  in  view  the  policy  of  the  Government,  Cabinet  Committee  of  Economic  Affairs (CCEA),  in  its  meeting  held  on  27.01.2021,  has  already  accorded  'in-principle'  approval  for 100%  disinvestment  of  Government  of  India (GOI)  shareholding  in  Rashtriya  Ispat  Nigam Limited  (RINL)  along  with  RINL's  stake  in  its  subsidiaries/Joint  Ventures  through  strategic disinvestment by way of privatization.

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