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What is the news?
The central government has decided to give some powers in the strategic disinvestment process to the Department of Public Enterprise (DPE). This department has been brought under the Ministry of finance.
How does the current disinvestment process work?
As per the current process, NITI Aayog identifies companies for disinvestment. This proposal is sent to the cabinet secretary, led by the Core Group of Secretaries on Divestment (CGD). It consists of the finance minister, the Minister for administrative reforms and the Minister for Road transport and highways.
The CGD gives suggestions to the alternative mechanisms (AM).
Once approved by AM, DIPAM moves the proposal to the Cabinet Committee of Economic Affairs.
What are the challenges with the current procedure?
The existing process involves around 12 steps and takes around 12 to 13 months. The current proposal would lead to speeding up this process.
What is the new procedure?
The Government may empower DPE to seek approvals on candidates for privatization from the Cabinet after NITI Aayog suggests names of public sector enterprises for strategic disinvestment.
The existing task of the Department of Asset and Public Asset Management of taking the candidates for privatization to the CGD and then to the Alternative Mechanism and the Cabinet may be given to the DPE.
The DPE is preparing the new guidelines for the closure of PSUs.
The track record of the government on strategic sales has been dismal. These changes can bring positive outcomes and lead to better resource utilization.
Source: This post is based on the article “Centre plans to give some strategic disinvestment powers to DPE” posted in the Business Standard on 15th November 2021.
