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CCEA approves procedure and mechanism for Strategic Disinvestment

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On August 16, 2017, Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi, approved following two proposals of Department of Investment and public Asset Management (DIPAM) for strategic disinvestment:
(i)Setting up an Alternative Mechanism:

  • An Alternative Mechanism (AM) consisting of the Finance Minister, Minister for Road Transport & Highways and Minister of Administrative Department will be set up to decide on the matters relating to terms and conditions of the sale from the stage of inviting of Express of Interests (Eols) till inviting of financial bid.
  • Alternative mechanism will eliminate the need to approach CCEA at each stage for clearance during the process of selling stake in Central Public Sector Enterprises CPSE.
  • With Alternative mechanism in place, CCEA will be approached for clearance only after a buyer is finalized, thereby speeding up the process of strategic disinvestment.

(ii)Empowering the Core Group of Secretaries (CGD):

  • CCEA has also given its nod for empowering the core group of Secretaries to take policy decisions with regard to procedural issues and to consider deviations as necessary from time to time for effective implementation of decisions taken by the Cabinet.

Strategic Disinvestment Plan of Union Government:

  • Strategic disinvestment implies the sale of a substantial portion of government stake in Central Public Sector Enterprises (CPSE) with transfer of management control.
  • For 2017-18, the Centre’s disinvestment target has been pegged at Rs.72,500 crore, of which, about Rs. 42,500 crore is envisaged from minority stake sale and exchange traded funds.
  • Several top notch state-owned entities including Air India, BEML and Salem Steel Plant are being lined up for strategic disinvestments this fiscal.
  • So far this fiscal, the Centre has raised Rs. 9,300 crore.

It is to be noted that DIPAM under Finance Ministry deals with all matters relating to sale of Union Government’s stake in CPSE through private placement or offer for sale or any other mode.