Explained: What is the government’s new policy on the strategic sector?
22nd July, 2020
Context:
The government will soon come out with a policy on strategic sectors and simultaneously kick into motion a process of complete privatisation for companies in the non-strategic sectors.
First time since 1956 that the government has said, it will not have state-owned companies in the non-strategic sector.
General guidelines in Policy:
Reduction in the number of strategic sector.
Proposed policy would notify the list of strategic sectors requiring the presence of at least one state-owned company along with the private sector.
In all other sectors, the government plans to privatise public sector enterprises, depending upon feasibility.
The number of enterprises in strategic sectors will be only one to four.
Others companies would be privatised/merged/brought under a holding company structure.
The policy will put out a “general framework”.
Specific decisions, on which company is to be privatised, merged, or put under a holding company structure, would be taken later on.
Expected to be a long-term process rather than a one-time move on the privatisation of companies.
Help in Privatisation:
The government has already set in motion privatisation plans for large PSU companies BPCL, Air India, Container Corporation of India and Shipping Corporation of India.
The emphasis on privatisation could see companies in chemicals and infrastructure space being privatised.
Government has stated its intent to reduce the number of state-owned banks.
A holding company structure could also be used to house equity of smaller banks in one entity.