Privatisation of public sector undertakings in India

Privatization of public sector undertakings in India is a process of public asset sales done by the president of India on behalf of the Government of India. It can be directly offered for sale to the private sector or indirectly done through a bidding process whereas Disinvestment is partial sale of stake through IPO or market mechanisms but still controlling majority stake or controlling as a subsidiary of another PSU to make them more efficient. Many PSUs buy other PSUs from Government for their own expansion or better functioning. Many government departments, agencies and authorities are undergoing massive corporatization before disinvestment and privatization.

The Public Enterprises Survey (2015–16), brought out by the Department of Public Enterprises, Ministry of Heavy Industries, Government of India on the performance of Central Public Sector Enterprises (CPSEs) was placed in both the Houses of Parliament on 21 March 2017. There were 331 CPSEs in 2017–18, out of which 257 were in operation. The remaining 74 of the CPSEs were being established.[1]

Overview

Following the theories of economic liberalism and infrastructure-based development as referenced in the Union Budget of India, the total expenditure of the Government of India increased from ₹1,13,422 crore in 1991–92[2] to ₹ 21,46,735 Crore in 2017–18.[3] To help raise the necessary capital for these expenditures and also to minimise the nation's fiscal deficit, the Government of India started privatisation of all government establishments which includes public sector undertakings. Conceding to the demands of privatisation, the Government of India slowly began the privatisation of government establishments such as PSU's despite stiff resistance from labour unions. The below table provides data regarding the disinvestment process which began in 1991 (barring two small units being CMC Limited and Patherele Concrete).

History

Rise of Dirigisme after 1991 reforms

After liberalisation in 1991, India shifted from a mixed planned led Soviet type model to a more market-oriented dirigisme economy with indicative planning.[4][5][6] The 1991 reforms led to formation of pseudo-state owned companies by Government of India such as NSE, NSDL, CRISIL, IL&FS, IDFC etc. which were joint-venture/subsidiary of Public Sector Undertakings(PSUs) or Public ownership disguised as Private and controlling stake(>25%) owned by PSUs as a protectionist policy to lead the market reforms instead of invisible free-hand of free market.The Eighth Five Year Plan (1992 - 1997) adopted Indicative Planning in India. The Eighth Five Year Plan (1992 - 1997) managed the transition from a centrally planned economy to a market led economy through indicative planning and public sector.

1999–2004

Major disinvestment steps were taken in the past by the BJP-led NDA government between 1999 and 2004. BJP privatised the central government establishments such as central public sector units which included Bharat Aluminium Company (BALCO), Hindustan Zinc[7] (both to Sterlite Industries), Indian Petrochemicals Corporation Limited[8] (to Reliance Industries) and VSNL[9] (to the Tata group) and various state government establishments which included many state public sector units.

2014–2024

Between 2014 and 2018 the BJP-led NDA government divested a total of ₹1,94,646 crore,[10] which included minority and majority stakes of the most profitable central government establishments such ONGC-HPCL deal which was worth ₹ 36,915 crore.[11] In the budgetary announcements of the financial year 2017–18, the late Finance minister Arun Jaitley announced that the government will initiate privatisation of 24 CPSUs, including Air India Limited which turned from a profit making entity into a loss making entity during the INC-UPA government during the year 2007–2008. This would have been the first year in which the government was on track to hit the divestment target.[12] However, this did not go through as planned since the COVID-19 crisis threw the entire world economy into disarray.[13]

On 17 May 2020, as part of a package the Finance minister Nirmala Sitharaman announced that the government will privatise all government establishments which also includes Public sector enterprises in all the sectors. She also stated that in all the strategic sectors, the number of PSU's will be limited to 4. In strategic sectors with more than 4 PSU's, the government will privatise, merge or consolidate the PSU's under holding companies in order to reduce wasteful administrative costs. Nirmala Sitharaman stated that there is a need for a coherent policy where all sectors are open to private sector participation while PSU's play an important role in defined areas.[14]

Since financial year 1991–92 to 2017–18 the Government of India sold public assets totalling ₹3,47,439 Crore. In recent years, certain public sector undertakings performed reasonably well and paid significant dividends to the government,[15] whereas other PSU's such as Air India, BSNL, and MTNL made huge losses, costing the taxpayer massive amounts of money.[16] Net Profit of all 257 operating CPSEs during 2016–17 stood at ₹ 1,27,602 crore compared to ₹ 1,14,239 crore during 2015–16 showing growth of 11.70%,[17] while Loss of loss incurring CPSEs minimized to ₹ 25,045 crore in 2016–17 compared to ₹ 30,759 crore in 2015–16 showing a decrease in loss by 18.58%.[18] According to government data, 96 new CPSEs were incorporated between 2014 and 2022.[19]

List of entities privatized

Disinvested Public Sector Companies

Company name when it was a PSUDisinvested (year)Present owner
Hindustan Steelworks Construction Limited2017NBCC
Donyi Polo Ashok Hotel2017Government of Arunachal Pradesh (joint venture, Government of India sold its stake to the Government of Arunachal Pradesh)
Madhya Pradesh Ashok Hotel Corporation2017Government of Madhya Pradesh (transferred ownership to the Government of Madhya Pradesh)
Bharatpur Ashok Hotel Corporation2017Government of Rajasthan (transferred ownership to the Government of Rajasthan)
Patliputra Ashok Hotel Corporation2018Government of Bihar (transferred ownership to the Government of Bihar)
Srinagar Centaur Hotel2017Government of Jammu and Kashmir (transferred ownership to the Government of Jammu and Kashmir)[25]
Pondicherry Ashok Hotel Corporation2017Government of Puducherry (transferred ownership to the Government of Puducherry)
Mangalore Refinery & Petrochemicals2018merged with HPCL
Dredging Corporation of India2018Broken up among four ports: Vishakhapatnam Port Trust, Paradeep Port Trust, Jawaharlal Nehru Port Trust and Kandla Port Trust
HSCC2018acquired by NBCC
Rural Electrification Corporation Limited2018acquired by Power Finance Corporation
Hindustan Petroleum Corporation Limited2018acquired by Oil and Natural Gas Corporation (ONGC)
Kamarajar Port2019acquired by Chennai Port Trust
North Eastern Electric Power Corporation Limited (NEEPCO)2020acquired by NTPC Limited
Tehri Hydro Development Corporation2020acquired by NTPC Limited (74.23%), Government of Uttarakhand (25.77%)
Mahanagar Telephone Nigam Limited (MTNL)2020acquired by Bharat Sanchar Nigam Limited (BSNL)
Hindustan Newsprint2020Government of Kerala (transferred ownership to the Government of Kerala)[26]
Ranchi Ashok Bihar Hotel Corporation2020Government of Jharkhand (transferred ownership to the Government of Jharkhand)[27]
Jammu Ashok Hotel Corporation2020Government of Jammu and Kashmir (transferred ownership to the Government of Jammu and Kashmir)[28]

Table

Year . Total Receipts (Rs. Crore) Inflation Adjusted Total receipts (In 2019 Rupees)[29]
1991–923,037 18,743
1992–931,912 10,926
1993–940 0
1994–954,843 23,271
1995–96168 735
1996–97379 1504
1997–98910 3,397
1998–995,371 17,386
1999–001,860 5,993
2000–011,871 5,825
2001–025,657 16,750
2002–033,347 9,634
2003–0415,547 43,006
2004–052,764 7,367
2005–061,569 3,961
2006–070 0
2007–084,181 9,392
2008–090 0
2009–1023,552 41,948
2010–1122,144 36,029
2011–1213,894 21,229
2012–1323,956 32,925
2013–1415,819 19,987
2014–1524,348 28,967
2015–1623,996 26,851
2016–1746,247 50,620
2017–181,00,056 1,05,303
2018–1984,972 84,972
2019–2050,299[30] 45,804.9
2020–2132,845 [31] 29,619
2021–22 13,531 12,220
2022–23 35,293 30,099
2023–24 16,507 13,337
2024–25 10,163[32]

Total Sum Till 2017–18 ₹ 3,47,439[10]

See also

References

  1. ↑ "Performance of Central Public Sector Enterprises (CPSEs) during 2015–16". pib.nic.in. Retrieved 22 April 2018.
  2. ↑ "Analysis of Union Budget since 1947". Retrieved 22 April 2018.
  3. ↑ "Union Budget 2018–19" (PDF).
  4. ↑ "Chapter-7 : FIVE YEAR PLANS" (PDF). Mospi.gov.in. Retrieved 22 July 2026.
  5. ↑ Babones, Salvatore (27 July 2011). "Why France Has a Much Better India Strategy Than America". FP.
  6. ↑ Srivastava, Pankaj (27 July 2011). "I believe the neoliberal regime is also reaching a dead end: Prabhat Patnaik". GOVERNANCENOW.
  7. ↑ "Hindustan Zinc Track Record Moneycontrol".
  8. ↑ "IPCL Performance moneycontrol Old format".
  9. ↑ "VSNL Track record Moneycontrol".
  10. 1 2 "Summary | Department of Investment and Public Asset Management | Ministry of Finance | Government of India". dipam.gov.in. Retrieved 22 April 2018.
  11. ↑ "Hindustan Times ONGC-HPCL Deal". The Economic Times. 27 March 2018.
  12. ↑ "Disinvestment target for FY19 set at Rs 80,000 crore; to top Rs 1 lakh crore in FY18". The Economic Times. February 2018.
  13. ↑ Aulakh, Gulveen (8 April 2020). "Covid-19 throws a wrench into India's disinvestment plans". The Economic Times. Retrieved 18 May 2020.
  14. ↑ "Public sector enterprises in non-strategic sectors to be privatised". Livemint. 17 May 2020. Retrieved 18 May 2020.
  15. ↑ "Performance of Central Public Sector Enterprises (CPSEs) during 2015–16". pib.nic.in. Retrieved 22 April 2018.
  16. ↑ "BSNL, Air India and MTNL highest loss-making PSUs in FY19: Survey". Business Standard India. Press Trust of India. 10 February 2020. Retrieved 18 May 2020.
  17. ↑ "CPSE Conclave on Twitter". Twitter. Retrieved 22 April 2018.
  18. ↑ "CPSE Conclave on Twitter". Twitter. Retrieved 22 April 2018.
  19. ↑ https://www.outlookbusiness.com/news/government-incorporated-96-new-cpses-since-2014-data-news-191905
  20. ↑ "HDFC Bank to Sell 2% Stake in NSDL IPO".
  21. ↑ "IDFC FIRST Bank announces completion of IDFC Ltd merger | Company Business News". 28 September 2024.
  22. ↑ https://hindi.moneycontrol.com/news/ipo/nsdl-ipo-opens-on-this-day-check-selling-shares-three-entities-2041205.html
  23. ↑ https://timesofindia.indiatimes.com/city/raipur/fsnl-privatization-sparks-controversy-unions-denounce-collusion-between-government-and-private-companies/articleshow/114022428.cms
  24. ↑ https://energy.economictimes.indiatimes.com/news/coal/bccl-transfers-dugdha-coal-washery-to-jsw-steel-a-landmark-in-coal-sector-monetisation/131827470
  25. ↑ "J&K set to get ownership of Centaur, ITDC hotel in Gulmarg". Greater Kashmir. 9 December 2017.
  26. ↑ "HNL Goes to Kerala Govt, Centre Delays Handing Over ILP". NewsClick. 26 November 2019.
  27. ↑ "Jharkhand govt begins take over of Ranchi's Hotel Ashok | Ranchi News - Times of India". The Times of India. 25 November 2020.
  28. ↑ "Legendary Hotel Jammu Ashok shuts - Northlines". 18 June 2020.
  29. ↑ "India Inflation calculator".
  30. ↑ "India Inflation calculator".
  31. ↑ "Dipam Website".
  32. ↑ "Home | Department of Investment and Public Asset Management | Ministry of Finance | Government of India". dipam.gov.in. Retrieved 19 August 2025.
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