Focus: GS-III Indian Economy
Why in news?
- The government is working on completing the stake sale process of about 23 public sector companies whose divestment has already been cleared by the Cabinet.
- With regard to extending credit to the industry – under the Emergency Credit Line Guarantee Scheme (ECLGS), micro, small and medium enterprises (MSMEs) can avail loans.
- The government as part of the Aatmanirbhar Bharat package had announced opening up of all sectors for private participation.
- The final call as to which are the sectors that are going to be called ‘strategic’ is not made yet.
- This would lead to consolidation of public sector undertakings (PSUs) as well as scaling up of their operations.
The Economic Survey 2020 on Govt. Divestment in PSUs
- The Economic Survey 2020 has aggressively pitched for divestment in PSUs by proposing a separate corporate entity wherein the government’s stake can be transferred and divested over a period of time.
- The performance of privatized firms, after controlling for other confounding factors using the difference in the performance of peer firms over the same period, improves significantly the following privatization.
- Further, the survey has said privatized entities have performed better than their peers in terms of net worth, profit, return on equity and sales, among others.
-Source: The Hindu