THE MANTRA OF PRIVATISATION
India Today|February 15, 2021
The 2021-22 budget signals the government’s intent to disinvest like “never before”. But if that’s the new model for economic recovery, it’s easier said
SHWWETA PUNJ, ANILESH S. MAHAJAN AND M.G. ARUN
THE MANTRA OF PRIVATISATION

WHEN THE NARENDRA MODI GOVERNMENT came to power in 2014, one of its more memorable slogans was ‘minimum government, maximum governance’, a pledge to reduce the size and business footprint of government. In one area, in particular, it has little to show on this count: the divestment of PSUs (public sector undertakings). Though it has regularly set ambitious revenue targets— totalling Rs 6.57 lakh crore since 2014-15—it has fallen short year after year, achieving Rs 4.04 lakh crore as of 2020-21. The figures for this past fiscal year were particularly bad, with disinvestment revenues of Rs 31,000 crore against a target of Rs 2.1 lakh crore.

Nevertheless, finance minister Nirmala Sitharaman’s 2021-22 budget reiterates this commitment. Also, given that the outlook for both economic buoyancy and tax revenues remains subdued, the government is hoping to use the proceeds of big-ticket disinvestment to bankroll the next phase of economic recovery. In this effort, the Department of Investment and Public Asset Management (DIPAM) will play a key role. Its job is to make a few hundred PSUs lined up for divestment look attractive to investors. DIPAM has its task cut out, given the government’s reliance on non-tax resources. Making a virtue of that necessity, Ajay Bhushan Pandey, finance secretary and one of the chief architects of the budget, says: “The question was whether to follow an incremental approach or make a quantum leap. This budget is about a quantum leap into the future. The plan is to monetise [public sector] assets; the government should only be a facilitator.”

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