Reason of Privatization: RINL has been incurring losses for a few years.
The Government in the budget 2021-2022 stated that it has set a target of Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 Public Sector Banks and one General Insurance company. The disinvestment will begin from April 1 of FY 2021-2022.
New Public Sector Enterprises(PSE) Policy
i.The cabinet cleared the new Public Sector Enterprises (PSE) policy that gives a clear roadmap for disinvestment in strategic and non-strategic sectors.
ii.It was announced in a Rs. 20 lakh crore economic package under the ‘AatmaNirbhar Bharat Abhiyaan’.
The policy will cover existing Central Public Sector Enterprises(CPSEs), public sector banks and public sector insurance companies.
Classification of Sectors
The classification of Sectors to be disinvested include Strategic & Non-strategic sectors.
Strategic sector-Bare minimum presence of PSEs and the remaining to be privatised or merged or subsidiaries with other CPSEs or closed.
4 sectors under this:
- Atomic energy, space and defence
- Transport and telecommunications
- Power, petroleum, coal and other minerals
- Banking, insurance and financial services.
Non-strategic – CPSEs will be privatised, or will be closed.
Strategic Disinvestment in FY 2021-22
i.Stake sale of Corporation in FY 2021-22- Bharat Petroleum Corporation Ltd, Air India(BPCL), Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans and Neelachal Ispat Nigam Ltd among others.
ii.NITI Aayog has been asked to get ready with the next list of CPSEs for strategic disinvestment.
Note– The Legislative amendments that are needed for Initial Public Offering (IPO) of the Life Insurance Corporation of India (LIC) would be brought in 2021-22
Incentive package for States
In order to encourage states to disinvest their Public Sector Companies an incentive package of Central Funds for them will be prepared.
SPV to Carry Out Monetization of Idle Land
i.Union Minister for Finance and Corporate Affairs,Nirmala Sitharaman, proposed in the budget to use Special Purpose Vehicle(SPV) in the form of a company to carry out monetization of idle land. This can be by direct sale or concession or by similar means.
ii.This has been proposed as the idle assets will not contribute to AtmaNirbhar Bharat and the non-core assets largely consist of surplus land with government Ministries/Departments and Public Sector Enterprises
Revised mechanism to ensure closure of loss making CPSEs
Finance minister also proposed to introduce a revised mechanism to ensure that sick or loss making CPSEs are closed at the right time.
Recent Related News:
On November 16, 2020, Department of Investment and Public Asset Management (DIPAM), which handles government’s disinvestment programme, signed an agreement with the World Bank (WB) under which the latter provides advisory services to DIPAM for asset monetization. This was approved by Finance Minister Nirmala Sitharaman.
About Rashtriya Ispat Nigam Limited(RINL):
i.It is a corporate entity of Visakhapatnam Steel Plant(Vizag Steel) and is a Navaratna PSE under the Ministry of Steel.
ii.It is the 1st shore based integrated steel plant in India.
Chairman-cum-Managing Director– Pradosh Kumar Rath
Headquarters– Visakhapatnam, Andhra Pradesh