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Last Updated : Jul 08, 2019 05:46 PM IST | Source: Moneycontrol.com

To meet disinvestment target, govt may cut its stake in state-run companies to 26-45%

Sitharaman said the government’s stake in respective companies would be brought down to an appropriate level on a case-by-case basis

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In order to meet the budgeted disinvestment target of Rs 1.05 lakh crore, the government might reduce its stake in select state-run companies, a senior Finance Ministry official told The Economic Times.

In her maiden Budget speech, Finance Minister Nirmala Sitharaman mentioned the government’s plan to modify the existing definition of state-run companies. A company would still qualify as a public sector enterprise (PSE), even after the government’s stake in it falls below the current requirement of 51 percent, she said, adding that the idea was to bring the holdings of state-controlled entities under the ambit of the definition.

Sitharaman said the government’s stake in the respective companies would be brought down to an appropriate level on a case-by-case basis. Under the current definition, a company is classified as a PSE if the direct holding of the government or any other PSE in it is 51 percent or more.

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“The idea is to unlock the value in these firms. In case of oil firms, their cross-holdings among each other give us that space,” the article quoted an official as saying. He added that in certain non-strategic companies, the government may bring down its stake to as low as 26 percent, while it may want to maintain the threshold of 40-45 percent in other companies.

Atanu Chakraborty, Secretary, The Department of Investment and Public Asset Management (DIPAM), in a post-Budget interaction, told the paper that for the first time the government had made a distinction between control and a 51 percent holding.

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First Published on Jul 8, 2019 01:37 pm
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