CII urges government to fast-track PSU privatization for growth
What's the story
The Confederation of Indian Industry (CII) has urged the Indian government to accelerate its privatization process in a bid to boost capital expenditure. The industry body has suggested a demand-driven selection process, a three-year privatization pipeline, and an institutional framework to speed up disinvestment. This strategy is seen as a way to unlock significant resources for national development amid global economic uncertainties.
Strategic proposal
Strategic approach to privatization
The CII has proposed a strategic approach to privatization, focusing on sectors where private participation can enhance efficiency and global competitiveness. Chandrajit Banerjee, Director General of CII, emphasized the importance of privatization in today's global economic landscape. He said India's growth story is increasingly driven by private enterprise and innovation.
Policy acceleration
Call for accelerating strategic disinvestment policy
The CII has also called for fast-tracking the government's Strategic Disinvestment Policy. This policy envisages an exit from all Public Sector Enterprises (PSEs) in non-strategic sectors and a minimal presence in strategic ones. To strengthen and expedite this program, the CII has proposed a four-pronged strategy including a demand-based approach to select PSEs for privatization, announcing a rolling three-year privatization pipeline, and establishing an institutional framework.
Disinvestment strategy
Phased disinvestment strategy for listed PSEs
The CII has also proposed a phased disinvestment strategy for listed PSEs. This would involve reducing the government's stake in these companies to 51% initially, and then further down to between 33-26%. The industry body estimates that this could unlock nearly ₹10 lakh crore of productive capital. In the first two years of this roadmap, the disinvestment strategy could target 55 PSEs where the government holds 75% or less, mobilizing around ₹4.6 lakh crore.
Higher stake disinvestment
Phased disinvestment strategy for higher stake PSUs
In the next phase, 23 PSEs with higher government stakes (over 75%) could be disinvested, potentially bringing in ₹5.4 lakh crore. Banerjee said a calibrated reduction of government's stake in listed PSEs to 51% and even lower is a pragmatic step that balances strategic control with value creation. He added unlocking nearly ₹10 lakh crore of productive capital would provide vital resources to accelerate physical and social infrastructure development and support fiscal consolidation.