India's Union government will privatize five or six companies in the current financial year of 2021-22, including Bharat Petroleum (BPCL), Shipping Corp of India and Pawan Hans, said DIPAM Secretary Tuhin Kanta Pandey.
He added that the government is planning to invite bids for privatisation by December-January for the above mentioned companies.
Speaking at Confederation of Indian Industry (CII) Global Economic Policy Summit 2021 on November 17, Pandey said that he also expects to complete privatisation of BEML and Neelachal Ispat by 2021-22.
DIPAM is the Department of Investment and Public Asset Management, and comes under the Finance Ministry. Its role is to privatize PSUs or take them public through initial public offerings, and shed stake in listed PSUs through offer-for-sales. The department also monitors dividends paid and share buybacks by PSUs.
DIPAM’s role is especially crucial this year as the centre looks to meet an ambitious divestment target of Rs 1.75 lakh crore. Having already successfully carried out the sale of Air India to Tata Sons, Pandey’s task for the remainder of the year is to privatize Bharat Petroleum, among others, and take LIC public.
Department of Economic Affairs Secretary Ajay Seth, who also spoke at the event, said: "We need to increase capital expenditure in India to make up around 10 percent of the country's GDP in the next few years."
As the government pushes to list the initial public offering (IPO) of Life Insurance Corporation of India (LIC), Seth reiterated that the government is working very hard for it and expects to launch it in the last quarter of 2021-22.
He added that capital markets are not mature enough to give long-term finance and there is a need to further develop them for long-term financing.
Talking about the real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), Seth said that the government compiling a list of good and bad practices for InvIT and ReITs from the recent InvITs launched by PSUs.
"We will encourage more PSU to utilise InvITs to raise funds," he said.
To set the context, compared to more than 800 listed REITs globally with a combined market capitalisation of $2.4 trillion, the product is still in its early days in India.
The market capitalisation of the only three listed REITs in India is $4 billion and the total capitalisation of all listed and private InvITs in the country is approximately $10 billion. Thus, there is a clear need to create a stable regulatory environment to foster quicker adoption of InvITs and REITs in India.
Seth also said that the unorganised sector has lost wealth due to COVID-19 pandemic. "It will take time to restore lost wealth in unorganised sector due to COVID-19."
Furthermore, the government and the Reserve Bank of India are closely watching credit-off takes by MSME's. Government is also closely monitoring semiconductor shortage," he stated.
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