Government Approves Strategic Disinvestment Mechanism

At last the procedure of strategic sate of PSUs has started. Government has approved the proposal of Department of Investment and Public Asset Management for laying down the procedure and mechanism for strategic disinvestment of Central Public Sector Enterprises (CPSEs)

Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi on Tuesday has given its approval for the procedure and mechanism for strategic disinvestment. Importantly this has also been announced by the Finance Minister in his budget speech on Monday. Ministry of Finance has issued instructions on procedures and processes for strategic disinvestment.

As per the government release, in the approved process, NITI Aayog would perform the role of erstwhile Disinvestment Commission. “In fact, the role of NITI Aayog is larger as it would also identify CPSEs for strategic disinvestment and suggest methods for valuation of the CPSE apart from advising the Government on mode and percentage of shares to be sold in a CPSE,” the media release quoted. Important to know that in the past strategic disinvestment would start with the recommendation of the Disinvestment Commission but not process has been changed.

For streamlining the process of disinvestment government has also core group of secretaries on disinvestment (CGD) headed by the Cabinet Secretary to Supervise and monitor the process of implementation of CCEA decisions on strategic disinvestment. Administrative ministry would be responsible for valuation of the CPSE. They would also appoint asset-valuers for strategic disinvestment. An Evaluation Committee (EC) would consider the valuation and fix the Reserve Price. This would be an inter-ministerial committee headed by FA level officer.

“Government would also appoint the Independent External Monitor (IEM) to vet the process and settle grievances Ministry of Finance has also been authorized to put in place an appropriate mechanism for protection of strategic disinvestment,” the finance ministry release quoted