Instead of focusing on disinvestment just to meet its target, the government will focus on improving the performance of Central Public Sector Enterprises (CPSEs) so that wealth creation can be maximized. Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kant Pandey said this on Thursday. Pandey said that the market capitalization of 77 listed public sector companies has increased four times to about Rs 73 lakh crore in the last three years. These include banks, insurance companies and Central Public Sector Enterprises (CPSEs).
LIC’s market cap increased to 7.2 lakh crores
Pandey said that the performance of public sector units has improved and the markets have started valuing these units better. He said that Life Insurance Corporation of India (LIC) has played an important role in the total market capitalization of CPSEs. According to the latest data from BSE, the market capitalization of LIC has reached Rs 7.2 lakh crore. The DIPAM secretary said that the performance of public sector units has improved significantly, capital expenditure has improved, management incentives are being aligned with the performance of CPSEs and the market’s attention on this has also changed the perception about CPSEs.
Now the focus is on value creation
Pandey said, “The disinvestment strategy is merely a help. It is included in the asset management strategy, it is not the main strategy. If you have an effective disinvestment strategy, it is a fiscal asset management strategy, not a public asset management strategy. We are leaning towards a value-creation strategy and focusing on asset creation.” The government has now also stopped giving any clear target for disinvestment receipts in the budget document. It now provides a budget for capital receipts, which includes receipts from disinvestment and asset monetization. In the current financial year, the government has budgeted Rs 50,000 crore from capital receipts, up from Rs 30,000 crore in the previous financial year. Pandey said that DIPAM will follow a well-planned disinvestment strategy. He said, “Why should we not trust our shares? We cannot say that this is the target, so sell the shares in any case. This approach has not helped.”
