‘States welcome private investors, but push back on PSU privatisation’

Some State governments tend to have a “duality” in their approach towards the strategic disinvestment of public sector enterprises even as they go all out to attract private investors by holding large investment summits with offers of land parcels and myriad sops, a top Finance Ministry official flagged on Monday. 

Some State governments tend to have a “duality” in their approach towards the strategic disinvestment of public sector enterprises even as they go all out to attract private investors by holding large investment summits with offers of land parcels and myriad sops, a top Finance Ministry official flagged on Monday. 

The comments assume significance, coming a month after the Centre was compelled to drop a plan to privatise the Salem Steel Plant, a unit of SAIL, due to lack of bidder interest in the absence of co-operation from the Tamil Nadu government, which didn’t even enable potential bidders to enter the plant and assess its worth.

“State governments, in general, have a very lukewarm response to strategic disinvestment,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey told The Hindu. “I think we need to engage more proactively with them. In general, if we are really saying that we are encouraging private sector participation, I think to that extent, there is a little bit of duality in the process there,” he added.

Pointing to the several investment summits held by State governments, Mr. Pandey said that a lot of MoUs (Memorandums of Understanding) are signed in those summits, primarily with the private sector.

“But then when it comes to privatisation or strategic disinvestment (of public sector enterprises in these States), there is a pushback. So both these things don’t gel,” the Secretary emphasised. “To do such transactions, you need a lot of patience and perseverance as well as co-operation from multiple stakeholders,” he said.

While the Centre had incentivised State governments to undertake disinvestment of their public sector enterprises in the Union Budget of 2020-21, the nudge was discontinued in the next Budget as the idea did not find many takers.

In some States, the disinvestment of Central PSUs has got delayed due to delays in notifying changes to the Indian Stamp Act that were cleared by the Centre to facilitate demerger of assets.