Budget expectations: No change likely in privatisation plan of CPSEs next fiscal

If there is no change in the privatisation plan during the 2023 budget, it suggests that the government would proceed with the previously planned strategic sales of enterprises such as Shipping Corporation of India, NMDC Steel, BEML, Container Corp, and the big ticket IDBI Bank.

The Finance Ministry would most likely continue to the previously stated and planned privatisation of Central Public Sector Enterprises (CPSEs) in fiscal 2023-24. Furthermore, the prospects of a new CPSE being added to the list in the 2019 Union Budget are considered remote.

According to an official, the Lan intends to proceed with the strategic sale of the enterprises, for which Cabinet clearance has already been obtained.

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If there is no change in the privatisation plan during this budget 2023, it means that the government will proceed with the previously planned strategic sales of companies like Shipping Corporation of India, NMDC Steel, BEML, HLL Lifecare, Container Corporation of India and RINL or Vizag Steel, as well as the big ticket IDBI Bank.

Furthermore, given the length of time required for strategic sale or privatisation, the high-budgeted disinvestment aim may not be met.

According to PTI, Suraj Nangia, Partner-Government and Public Sector Advisory at Nangia Andersen LLP, “the privatisation process often takes time, depending on the type of privatisation and the economic, social, and political context,” emphasising the importance of a medium-term plan, a solid regulatory framework, and competitive markets.

Nangia also stated that a multi-year strategic plan for privatisation may be developed to provide a precise schedule and well-designed privatisation sequencing and strategy.

Finance Minister Nirmala Sitharaman will present the Budget 2023 on February 1st, one year before the elections.

The government set a disinvestment target of ₹65,000 crore in Budget 2022 for fiscal year 2022-23. According to the most recent DIPAM statistics, disinvestment of ₹31,106.64 crore has been accomplished in the current fiscal year, accounting for roughly 48% of the projected objective.

So far in FY23, the following big disinvestments have occurred: a share sale of ₹20,516.12 crore in the largest insurer, LIC, a stake sale of ₹3,839 crore in Axis Bank via SUUTI, OFS worth ₹3,026.23 crore, and a stake sale of ₹2,723.73 crore in ONGC and IRCTC.