This year, the government has a target to raise the highest ever amount - Rs 69,500 crore -- from disinvestment.
The office of Prime Minister Narendra Modi has stepped into the process of divestment, calling for a clear roadmap for 58 loss-making Public Sector Enterprises. It has been decided to close five of these units immediately, 11 will stop getting non-budgetary support.
The cabinet secretary had been asked to get an action plan ready for either the revival or the closure of the rest within a month. He has now moved a note asking the Department of Disinvestment to become the nodal ministry and take control over the entire process of overseeing the revival or closure of the sick PSUs.
The PMO's directive comes after an earlier effort to make it easy to do business in India and the government unveiled a series of steps to facilitate the process.
"It is a matter of great concern for the government because of the insolvency and sickness of the Public sector undertakings... Assets worth crores of rupees are locked in," said the principal secretary in PMO Nirpendra Mishra.
The Cabinet Secretariat wants the Department of Disinvestment to become the nodal ministry to look after the action plan and divestment of sick units. Already, meetings have been held with 17 ministries to get their action plan. A set of questionnaire has also been sent to these ministries to get a clear picture of the units under them.
The PMO has asked the ministries for a clear demonstration of their viable business model, details of projected profitability and cash flow for 5 years. The ministries have also been asked to explain why the unit concerned was failing to make profits and its current market share.
The government has sold minority stake in three sick units this fiscal year to raise over Rs. 3,300 crore. With the sale of 10% stakes in Indian Oil Corporation, which fetched more than Rs. 9,300 crore, the government's disinvestment kitty is expected to swell to Rs. 12,600 crore -- the best first half in seven years.
This year, the government has a target to raise the highest ever amount - Rs 69,500 crore -- from disinvestment.
The Disinvestment Department already has cabinet approvals for Rs 50,000 crore worth PSU stake sale, but volatility in stock markets is delaying the plans. Trade unions have also expressed their disagreement on government's disinvestment plan during their meeting with PM Modi in July.