Budget 2024: Privatisation of PSUs will happen but best time to be decided, says FM

FM on banks

The privatisation of public sector undertakings (PSUs) is very much on the table and the government is committed to carry it out as these are the decisions of the Union Cabinet, though the timing for it will have to be decided, Finance Minister Nirmala Sitharaman said on July 23.

“Privatisation of PSUs, a cabinet decision, has to be honored. But timing has to be chosen by the government depending on what's the best time” Sitharaman said at a press briefing post the presentation of the Union Budget in the Parliament.

Sitharaman said that the PSUs have been giving high dividends on account of good growth.

The combined market cap of 81 listed PSUs, including banks and insurance companies, has grown by 225% in the last three years, on the back of higher government capex and better capital management, Sitharaman had said on May 8.

Four public sector banks, including Canara Bank and Indian Bank, on July 10 gave dividends worth Rs 6,481 crore for financial year 2023-24.

The Union Budget has not given a specific disinvestment target. It has estimated Rs 50,000 crore combined for asset monetisation and disinvestment.

“PSU dividends have gone up. Non tax revenue mobilisation is happening,” Sitharaman said.

“There is a holistic strategy to create value in PSUs,” Department of Investment and Public Asset Management secretary Tuhin Kanta Pandey said at the post-budget press conference.

The 2021 Budget had announced privatisation of two public sector banks and an insurance company. Some of the PSU strategic sales, including Shipping Corporation of India and NMDC Steel, are at an advanced stage.

The bids for privatisation of IDBI Bank are currently with the Reserve Bank of India for scrutiny. The bidders who have shown interest through EoI have to get two sets of clearances -- one from the home ministry for security clearance and the other from the Reserve Bank of India (RBI) for meeting the 'fit and proper' criteria.

The government, along with LIC, is selling nearly 61 per cent stake in IDBI Bank and had in October 2022, invited bids from buyers. In January 2023, DIPAM said it had received multiple Expressions of Interest (EoI) for buying a stake in IDBI Bank.