While the focus of government watchers on July 7 was on the mega-cabinet reshuffle, that very morning the Centre carried out another important administrative change. Through a gazette notification, the government split the Ministry of Heavy Industries and Public Enterprises and brought the Department of Public Enterprises under the administrative control of the Finance Ministry.
This move is aimed at ensuring that the Centre’s privatisation, asset monetisation and capital expenditure plans for state-owned companies are aligned and coordinated, a top government official told Moneycontrol.
“It demonstrates our deep commitment towards realising privatisation and asset monetisation plans, not just for this year but on a long term basis,” the official said.
DPE handles matters of general policy affecting all Public Sector Enterprises (PSEs), evaluation and monitoring the performance of PSEs, including the memorandum of understanding mechanism, review of capital projects and expenditure in PSEs.
It also frames measures aimed at improving the performance of PSEs and other capacity-building initiatives, rendering advice relating to revival, restructuring or closure of PSEs including the mechanisms, counselling, training and rehabilitation of employees in CPSEs under Voluntary Retirement Scheme and categorisation of CPSEs including conferring 'Ratna' status, among others.
DPE becomes the sixth department in the Finance Ministry, the others being Department of Investment and Public Asset Management (DIPAM), Department of Economic Affairs, Department of Revenue, Department of Expenditure and Department of Financial Services.
Each department is headed by a Secretary-level officer who reports directly to the finance minister, with the senior-most of them being designated the finance secretary. Expenditure Secretary TV Somanathan is currently the finance secretary.
Incidentally, DPE started off as the Bureau of Public Enterprises in 1965 under the Finance Ministry and became a full-fledged department in 1990.
Move to help in Asset Monetisation, Capex
“We are very serious about executing the plans for privatisation and asset monetisation. The structure of rules for PSEs is framed by DPE. And having DIPAM and DPE under the same ministry helps in fixing the right incentive structure for PSEs so that everybody moves in sync on privatization and asset monetization,” said the official quoted above.
“Having them under the same administrative umbrella helps in coordination and a common aim towards realising our objectives,” the person said, adding that the Finance Ministry will also be able to better monitor the capital expenditure plans of PSUs.
The Centre’s divestment target for 2021-22 stands at an ambitious Rs 1.75 lakh crore, with the planned privatisation of Air India, Bharat Petroleum, Concor and Shipping Corp at its core. There is also a plan to take Life Insurance Corporation public, and privatise two state-owned banks and an insurance company.
The Centre has also made its intentions clear on a massive asset monetisation programme. The proceeds from assets being monetised will not come to the government directly but will go to the PSUs, which may either invest the sums, or transfer them to the Centre in form of dividend or buybacks.
Since 2018-19, the plans to monetise the assets of the government and PSUs across the board, from key gas pipelines, power transmission lines, sports stadia to office spaces, lands and apartments deemed surplus to requirements, have been taking shape. They were finally spelt out by Finance Minister Nirmala Sitharaman in her 2021-22 Union Budget.
Later in February, Prime Minister Narendra Modi had said that the plan is to monetise 100 government and PSU-owned assets worth Rs 2.5 trillion ‘investment opportunity’.
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