The Cabinet headed by Prime Minister Narendra Modi on Wednesday delegated powers to a select group of ministers that include Finance Minister Arun Jaitley to decide on modalities of stake sale in PSUs.
Once the Cabinet approves disinvestment in a public sector undertaking, the group that includes the Finance Minister, Road Transport Minister Nitin Gadkari and the concerned administrative minister, will take over decision making on a range of issues - from date of stake sale, price band and tranches.
“The CCEA has given its approval to Alternative Mechanism, who would decide on the quantum of disinvestment in a particular Central Public Sector Undertaking (CPSE) on a case by case basis subject to government retaining 51 percent equity and management control,” an official statement said. This is in addition to the present functions performed by ‘Alternative Mechanism’ as has been approved by CCEA in August, 2014, said the statement issued after the Cabinet meeting.
The Cabinet on Wednesday also gave nod to Finance Ministry proposal to reduce its stake in five state-run general insurance companies to 75 per cent from present 100 per cent.
Under the ‘Alternative Mechanism’, now the minister’s group would decide on the quantum of stake sale in these individual general insurance companies and the pricing. They can decide to bring down the stake to 75 per cent in tranches and there would be no separate Cabinet approval required for this, sources said.
“This would reduce speculation and overhang and expedite the disinvestment process,” the official statement added.
The government has set a target of Rs 56,500 crore from PSU disinvestment in current fiscal. Of this Rs 36,500 crore is to come from minority stake sale and Rs 28,000 crore strategic sale of PSUs.
So far in current fiscal, the government has raised over Rs 23,500 crore through PSU stake sale.
Govt gives nod for listing of five general insurance PSUs
The listing of 5 state-owned general insurance companies was approved by the government on Wednesday to encourage them to raise funds from capital markets as also improve corporate governance.
“It could be either by fresh equity or Offer for Sale.Both options are available. We can expand the shareholding so that the government share comes down to 75 per cent,” Finance Minister Arun Jaitley told reporters after the Cabinet meeting here.
The Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi gave ‘in principle’ nod for listing five government owned General Insurance Companies -- New India Assurance Company, United India Insurance, Oriental Insurance Company, National Insurance Company and General Insurance Corporation of India (GIC).
The government shareholding in these companies will be reduced from 100 per cent to 75 per cent in one or more tranches over a period of time, he said.
“All procedural formalities are over. Now the companies will have to comply with the listing requirements with stock exchanges and Sebi,” he said.