Key Ministries Opposed Modi Govt’s Privatisation Policy: Report

Finance Minister Nirmala Sitharaman announced the new Public Sector Enterprise Policy in the Union Budget.

Updated
India
2 min read
Finance Minister Nirmala Sitharaman announced the new Public Sector Enterprise Policy in the Union Budget. Image used for representation. 
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The Narendra Modi government's push towards privatisation faced resistance from a number of key ministries, reported BloombergQuint, accessing correspondence exchanged over a seven-month period.

Despite massive pushback and concerns raised by key ministries, Finance Minister Nirmala Sitharaman announced the new Public Sector Enterprise Policy in the Union Budget of 2021-22 presented on 1 February.

THE MAIN

First announced as a part of the economic package amid the COVID-19 pandemic in May 2020, the Finance Ministry’s Department of Investment and Public Enterprises was entrusted with the task of framing the policy.

Forty nine ministries, departments, along with the Niti Aayog were asked to comment on 6 July and were given two weeks time to provide their response and suggestion.

YOU SHOULD READ ON BECAUSE...

While 21 ministries and departments supported the policy without offering any significant comments, seven departments wanted sectors controlled by them to be in the strategic list, another set of seven sought an exemption from the policy.

Three departments gave conditional approval and 10 sent in suggestions and comments, while raising red flags, reported BloombergQuint.

WHAT WE KNOW

The exclusive report stated that, among other departments, the Department of Space wrote a letter on 24 July 2020, suggesting that the two state-owned firms under its control – Antrix Corp and New Space India Ltd – shouldn’t be considered for privatisation.

“The former is facing ‘huge litigation with a liability of around Rs 9,200 crore’ owing to an international arbitration award, and the latter is ‘at the core of the government’s plan for opening up of the space sector,’ the letter said, even though the department said it was in ‘support of the proposal’ of privatisation more broadly,” the BloombergQuint report read.

The Health Ministry too wrote a letter opposing the non-inclusion of healthcare as a strategic sector.

The letter stated that it supported the proposed privatisation policy “subject to the inclusion of healthcare services as a strategic sector” where presence of a state-owned unit is required. The letter cited the experience in dealing with COVID-19 while making the case.

To read the full report, click here.

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