India: Big push likely for PSU asset monetisation in Budget

  • Governments asset monetisation programme involving development and sale of surplus land parcel and other non-core assets of public sector enterprises (PSEs) is expected to be big focus of Budget FY20 that is constrained to look at various innovative models to mobilise additional resources amidst a slowing economy.
  • Senior government officials said that the new asset monetisation programme will hinge on a two-pronged strategy. One involving strategic sale of loss making and defunct PSEs sitting on large tracts of land that could be commercially utilised.
  • The second part of the strategy will be to get even existing profit making PSEs such as ONGC, NTPC, SAIL, BHEL, Airports Authority of India (AAI), PowerGrid, to sell some of their non-core assets, including manufacturing units and surplus land to realise funds that could be invested in new projects where private investments is not forthcoming.
  • The government will benefit from such exercise as portion of gains from such sale by PSUs will be recouped to it by way of higher dividend pay-out. Also, it will receive a portion of the commission charged by state-run construction company NBCC Ltd that may get mandate to auction some of the PSU assets.
  • On its part, DIPAM and Niti Aayog, the government’s think-tank, have already started the exercise to identify projects that would be put up under the scheme. The consultants would assess their valuation and decide on a mechanism to sell them.
  • While the government seems determined to move ahead with its innovative idea that found its place first in then Finance Minister Arun Jaitley’s budget speech of 2016, a few PSU heads are not comfortable with the idea to hand over projects build with their sweat on a platter to the private sector.

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