Unlocking the Big Old Lockdown

Context: Budget 2021 shows the Government of India’s commitment to disinvestment.

Need for disinvestment/privatization

• To facilitate a fair and transparent regulatory architecture rather than doing business.
• For creating employment and tackling poverty: This was reflected in Prime Minister’s statement that ‘wealth creators need to be respected.
• To improve investor confidence.
• For promoting Atmanirbhar Bharat.
• Tackling the high cumulative losses of Public Sector Undertakings (PSUs): 80 PSUs have losses over Rs 80,000 crore.
• To legitimize and establish the credentials of the private sector:  as proud, confident wealth creators and nation builders.

Provisions in Budget 2021-22: related to disinvestment/privatization

• Disinvestment of public sector undertakings (PSUs): barring those in four strategic areas; the number of PSUs is targeted to reduce from over 300 to around 24.
  • The new disinvestment target for 2021-22 has been set at Rs 1.75 lakh crore.
  • Strategic disinvestment of Air India, Bharat Petroleum Corporation (BPCL), Shipping Corporation of India (SCI), Container Corporation (Concor), IDBI Bank, Pawan Hans and Neelachal Ispat, among others, is to be completed in 2021-22.
  • Government will also privatize 2 public sector banks (PSBs) and one general insurance company.
• Monetization of assets in government companies: by unlocking land banks.

Way forward: for a successful disinvestment drive

• Promote the idea that ‘good economics is also good politics’: By spreading the disinvestment success stories of the early 2000s.

• Create fair and business-friendly legal framework and regulatory architecture.

• Evaluate policy decision: based on its impact on the ease of doing business.