JOIN USGovt's bold divestment plan
The funds from such sales will be directly deployed for social sector schemes, instead of being routed through the National Investment Fund (NIF).
The divestment plan also requires already listed CPSEs to ensure at least 10 per cent public holding, Home Minister P Chidambaram told reporters after a meeting of the Cabinet Committee on Economic Affairs (CCEA), which was chaired by Prime Minister Manmohan Singh.
According to the CCEA’s decision, unlisted firms with a three-year track record of net profit and positive net worth will have to come out with Initial Public Offerings.
In its second term, the Congress-led government has already paved the way for listing of two PSUs––the NHPC and Oil India— and Thursday’s decision may result in more CPSEs hitting the capital market.
Now, there are over 40 listed state-run companies and over 100 others, including the BSNL, qualify for listing.
Chidambaram said CPSEs going to market would involve “some disinvestment” of the government. This would be done at an “appropriate” time.
In another policy shift, the proceeds of the disinvestment can now directly fund the capital expenditure of the social sector programmes such as education and health care and need not be routed through the NIF.
“Because of fiscal constraints, a special dispensation is made for three years to directly channelise the money into the capital expenditure for social sector,” Chidambaram said.
The unlisted companies which will be required to go public will include blue chip firms like BSNL, Rashtriya Ispat Nigam Limited and Coal India Limited. As regards the listed companies, Sebi regulations require all listed companies should have a minimum public float of 10 per cent. Several listed public sector companies, however, have less than 10 per cent public holding.