India’s economic growth story has had a few setbacks over the last couple of years. From the stressed balance sheet of the banking sector to slowing core sector growth, the rate of GDP growth has fallen from 7% a few years ago to below 5% in the last quarter.
While some suggest that the problem is temporary, it is weighing heavily on the government’s finances. As a result, the government is moving fast on a reform path to allow privatisation of many big Public Sector Units which will not only raise the much-needed funds but also bring in the efficiencies of the private sector and improve the economy.
The privatization agenda is not new but little has been achieved so far considering the hurdles and bureaucratic red tape that comes in the way of major stake sales. Moreover, investor confidence gets hampered when the process is slow and bulky.
To improve this, the Cabinet approved a new process for divestment in October this year which put the Department of Investment and Public Asset Management (DIPAM) in the driver’s seat for all divestment operations.
DIPAM, under the Ministry of Finance, will now be the nodal department for these operations as opposed to NITI Aayog driving the process earlier and then obtaining approvals from various ministries. Now, the process will be more streamlined as the government hopes to shore up Rs 1.05 lakh crore from disinvestment this year to manage its revenues. This becomes even more important as it doled out Rs 1.45 lakh crore of foregone revenues due to its corporate tax cuts earlier this year.
On the anvil for the next year are some pretty major stake sales which are expected to energize some laggard PSUs and give the government funds to continue spending to boost the economy.
These include a sale of government’s full stake of 53.3% in Bharat Petroleum Corporation Limited and a full 100% stake in NEEPCO to NTPC while Tehri Hydro’s 74.2% stake will also go to NTPC and Shipping Corp and Concor will offload the government’s 63.8% and 30.8% stake respectively to a strategic buyer.
The government is selling its entire 74.2% stake in the company to NTPC which is expected to add another Rs 2,720 crore to the public exchequer’s kitty.
With these potential stake sales and disinvestment, the government is hoping to cede control in some PSUs while also gathering funds to prime up the economy through public spending. If all goes well, India’s growth story is headed for a glorious path.
With Finserv MARKETS, investors can benefit from the economic growth by investing in direct mutual funds which earn higher return based on market performance. The platform offers a wide range of choices across sectors in a transparent and paperless manner. . One can log on to the platform and easily invest according to their return and risk appetite with minimal paperwork through an easy-to-follow process. Download the Finserv MARKETS’ Mutual Fund App and start investing in Mutual Funds today!!
Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.