The new government policy of India focuses on the privatization of non-core sectors, the government strongly plans to shrink the number of Public Sector Undertakings (PSUs). The count of Public Sector Undertakings that will be reduced to two dozen is over 300. The government will privatize the non-core sector and at the same time, there will be mass shut down the loss-making state-owned enterprises. The final number of privatized enterprises and will be further decided by the Union cabinet.
It was mentioned in the budget of 2021 that there will be only four key strategies sectors and in the key segments of that strategic sector, there will be a maximum of three to four Public Sector units.
The PSUs that the government plans to move out include Insurance Companies, especially in general insurance space, and banks. As per the policy, there will be the least presence of the public sector enterprises in the key strategic sectors. The Central Public Sector Enterprises (CPSEs) remaining in the strategic sectors will be either merged, subsidiaries, or privatized with other Central Public Sector Enterprises or will be closed, while in non-strategic sectors, either the Central Public Sector Enterprises will be privatized or shall be closed.
According to the Public Enterprises Survey 2018-19, the counts of public sector undertakings on March 31, 2019, were 348 and out of those, the count of operational enterprises was 249, out of which 86 enterprises were under construction and the remaining 13 were either under closure or liquidation.
It is expected that government will go on with the process of privatization of state-owned enterprises. The new policy spotted a huge shift in the government’s attitude towards privatization. The government is planning to involve global investors and private sectors to bring efficiency, and to provide the government with much-needed cash to help revive the economy as it was affected drastically by the COVID-19 pandemic.
