The Union Cabinet has approved the higher order disinvestment called strategic sale of PSU shares. Under strategic disinvestment or sale, government gives ownership control of a PSU firm to a private sector partner. The private sector strategic partner will get substantial share in the PSU and may get even higher than 51% share.
According to the latest Cabinet decision, disinvestment which would include transfer of at least 50% shares would be decided on a case by case basis.
The strategic sale amounts to full scale privatization unlike selling minority shares in the usual way. No strategic sale has taken place during the last thirteen years.
Decision for strategic sale was announced in the last budget where the government targets mobilization of Rs 20500 core. Procedures for strategic sale also has been outlined as the NITI Ayog will identify the companies and the DIPAM will develop the method for strategic sale.
Finance Minister Arun Jaitely has elaborated the latest developments on the matter. “ The recommendations of NITI Ayog with regard to both disinvestment and strategic sale came up for consideration. In principle, the Cabinet has approved the recommendations with regard to some units.”
The NITI Ayog has identified firms including Tyre Corporation of India, Cement Corporation of India and Central Electronics Ltd for strategic sale.