Amid indications that banking will feature in the government’s list of strategic sectors, under which only a maximum of four state-run entities will be allowed to operate in each sector, economic affairs secretary Tarun Bajaj on Friday said the policy will be “much more ambitious than anticipated” and will be followed up with implementations.
Under the policy, the government will unveil a list of strategic sectors, where at least one and a maximum of four central public sector enterprises (CPSEs) will be allowed, meaning others, if any, will be privatised. In other sectors, of course, all CPSEs will be privatised. The list of strategic sectors is yet to be approved and published by the Centre.
While he declined to divulge details, Bajaj added: “There is a slight delay in the announcement of the policy, as the government is trying to build more ambition into it. It will be rolled out soon.”
“I think it will bring in a paradigm shift in the way we think about the government,” he said at a Ficci event, responding to a question about the actual roll-out of the policy.
Bajaj also said India’s economic slump has bottomed out and it is poised to perform better in the third and fourth quarters of this fiscal than the three months through September, when the 7.5% slide in real GDP was actually lower than expected.
Asked about the setting up of a proposed development finance institution to help fund large infrastructure projects, Bajaj said it’s very much in the works.
As for the strategic sector list, Fitch Ratings recently hailed the government’s plan to privatise some state-owned enterprises. More than 200 firms are owned by the centre and 800 by state governments.
Already, NITI Aayog has mooted a proposal for the government to retain control over only the top four state-run lenders — State Bank of India, Punjab National Bank, Bank of Baroda and Canara Bank–if banking is added to the strategic sector list. At the same time, at least three small lenders–Punjab & Sind Bank, Bank of Maharashtra and Uco Bank — be privatised on a priority basis, it has suggested.
The Centre had budgetted an ambitious disinvestment target of Rs 2.1 lakh crore for FY21, hoping to partly make up for a lower-than-expected rise in tax collection, even before the Covid-19 spread its tentacles. But no worthwhile disinvestment has taken place so far this fiscal due to the pandemic. The leading corporations that have been on the block since last year include BPCL, Air India, Shipping Corporation and Container Corporation.
Bajaj exuded confidence that by the time the Budget for FY22 is announced on February 1 next year, there will be more positivity on the ground about the economic rebound. He acknowledged a blip in certain sectors but added that if some economic indicators have witnessed a fall in recent months, some others have gone up. Latest data show manufacturing and services PMI, exports and GST collection have somewhat lost momentum sequentially.
After a record slide of 23.9% in the June quarter, the year-on-year contraction in real GDP narrowed to 7.5% in the second quarter of this fiscal. This represented a quarter-on-quarter surge in GDP growth of 23% and raised hopes that the worst was behind us.
Speaking on the occasion, Guruprasad Mohapatra, secretary with the department for the promotion of industry and internal trade, said various departments are expected to notify the details of the 10 production-linked incentive schemes by April. The schemes are likely to draw a lot of investments.
Mohapatra said a genuine, unified window for various approvals will be made available to investors by mid-April, 2021 to ensure greater ease of doing business. This window will serve as a one-stop point for seeking a plethora of key approvals cutting across various departments and agencies. The need for seeking important approvals, however, won’t be curtailed.