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GOVT. TO GO AHEAD WITH DIVESTMENT OF PSUS

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.

Details

  • 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.

Click Here to read more about Emergency Credit Line Guarantee Scheme (ECLGS)

-Source: The Hindu

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October 2022
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