Government proposes to cut stakes in select firms to under 51 per cent

New Delhi: The government proposes to offload substantial stake in at least 10 blue chip companies this year to meet its higher disinvestment target, even though the exercise will bring down its holding in these state-run firms to below 51 per cent level, official sources said here on Wednesday.

The minimum government holding required for an entity to qualify as a central public sector enterprise (CPSE) is 51 per cent. The sources said the Department of Investment and Public Asset Management (DIPAM) would soon start consultations with the Power, Petroleum and Heavy Industries Ministries to initiate the disinvestment process for some CPSEs under their administrative control where government stakes are slightly more than 51 per cent.

Though this list of companies is yet to be finalised, the discussions are expected to revolve around companies such as Indian Oil Corporation (IOC), NTPC, Bharat Petroleum Corporation Ltd (BPCL), NALCO, GAIL India, Oil India Ltd (OIL), Engineers India Ltd (EIL), Power Grid Corporation (PGCIL) and Bharat Heavy Electricals (BHEL).

In the majority of identified companies, the government's current holding is just over 51 per cent. Only in BHEL and OIL, the government still holds just over 60 per cent stake. Presenting Budget 2019-20, Finance Minister Nirmala Sitharaman had said that the government could consider bringing down its stake in non-financial CPSEs to below 51 per cent on a case-by-case basis.

The current fiscal's disinvestment target of Rs 1.05 lakh crore has been increased from Rs 90,000 crore proposed in the Interim Budget 2019-20 in February. According to a source, the government is looking at companies that can command high market value and have strong financials and not in all such cases will majority stake be surrendered at one go.

While strategic sale will entail outright privatisation in some CPSEs, the government's direct holding can be brought down below 51 per cent with effective control continuing to remain with the government after taking into account the holding of other state-owned entities in such a divestment-bound CPSE.In 2018-19, the government raised Rs 84,972 crore from CPSE disinvestment, while in 2017-18, the figure was Rs 1,00,056 crore.