Centre rejects Niti Aayog’s disinvestment proposal

New Delhi: The government will not accept Niti Aayog’s proposal of reducing the Centre’s stake in non-strategic public sector companies to below 50% even as it is confident of breaching the disinvestment target for the second year running and raising over Rs 1 lakh crore in the current fiscal, a senior official told ET.

ET had earlier this month reported that Niti Aayog has recommended lowering the government’s stake to less than 50% in all non-strategic state-run companies over time for raising revenues as well as giving these companies the functional autonomy to perform better.

Niti had reasoned this would also increase the value of government’s remaining stakes in these companies. There are over 250 CPSEs in which the government holds 51% or more and include large ones like NTPC, Power Grid and Steel Authority of India.


Government officials said several companies with higher government holdings were performing well and it would be unfair to say that ownership and management structure needed to be overhauled for better efficiency.

An official pointed out that government holding in several PSUs was much more than 50% and it would not There was adequate headroom to raise revenue by decreasing shareholding without bringing it down to 49%.

The government has rejected Niti Aayog’s proposal, said one of the officials quoted above.

According to some independent observers, the government was also possibly reluctant to consider a politically sensitive proposal of ceding control over state-run companies in a year leading to elections.

The government is, however, pressing ahead with its disinvestment programme and is confident that like the previous year when it exceeded its disinvestment target, this year too it will breach its Rs 80,000 crore target and raise over Rs 1 lakh crore.

A senior official said the setback to the Air India privatisation plan will not impact the government’s disinvestment programme as it had not been factored into the target.

“We are not too worried over the delay of Air India stake sale. There are other companies and the government will exceed the disinvestment target this year as well,” said the above quoted official.

The government is already redrawing its plan to sell 76% stake sale in Air India after the first round of bidding that ended on May 31did not elicit any response. It is considering various tweaks to the offer to make it more attractive.

ET had reported earlier that government’s decision to retain 24% stake in the airline may have upset potential investors.

So far around Rs 434 crore has been raised through initial public offer of Mishra Dhatu Nigam Ltd (Midhani). MSTC Ltd., North Eastern Electric Power Corporation Ltd. (NEEPCO), Garden Reach Shipbuilders & Engineers Ltd.

(GRSE), and Mazagon Dock Shipbuilders Ltd are lined up for initial public offer.

“So we have a pipeline and hence no immediate need to focus only on the blue chip firms,” the official added.

The finance ministry is all set to launch the second tranche of Bharat-22 exchange traded fund (ETF) on June 19 which will help raise up to Rs 8,400 crore from the markets.

In addition, the government has also initiated the process of strategic disinvestment in 23 CPSEs, and will also come up with more exchange trade fund (ETF) offers including debt ETF.