Strategic disinvestment in BSNL, MTNL on cards -Governance Now

Strategic disinvestment in BSNL, MTNL on cards

Both BSNL and MTNL were not in the Niti Aayog’s list of sick PSUs, despite being loss making

GN Bureau | July 20, 2016

#BSNL #MTNL #disinvestment #loss-making #Babyul Supriyo #Niti Aayog

Government’s think-tank Niti Aayog may consider state-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) for strategic disinvestment, according to a news report published in The Indian Express.

Niti Aayog has been given the task to identify central public sector enterprises (CPSEs) where government should exit from management control, to the extent they should exit and what should be the mode of divestment. It will make recommendations on strategic sales to a core group of secretaries, headed by the cabinet secretary. The group of secretaries will make final suggestions to the cabinet committee on economic affairs on the mode and quantum of strategic disinvestment.

The Narendra Modi government has, on several occasions, blamed the previous regime for the financial decline of the two telecom service providers. Former telecom minister Ravi Shankar Prasad had said that in 2004, BSNL was incurring profits of around Rs 10,000 crore and MTNL Rs 900 crore. However, when the NDA government took charge in 2014, the BSNL was suffering a loss of Rs 8,000 crore and MTNL Rs 2,000 crore.

The Niti Aayog has submitted a list of 74 sick and loss making public sector undertakings (PSUs) to the government for the purpose of shutting down and restructuring. Both BSNL and MTNL were not present in the first list of sick PSUs, despite being loss making. If a strategic divestment of the two telecom companies is made, government would lose majority shareholding in these firms.

Minister of state for heavy industries and public enterprises Babul Supriyo on Tuesday in a written reply to the Lok Sabha said that an analysis of all the sick and loss making CPSEs was underway at Niti Aayog in consultation with the ministries and the departments concerned. He said, “78, 70 and 77 CPSEs incurred losses during 2012-13, 2013-14 and 2014-15, respectively.” Supriyo said the department of PSUs has issued guidelines for streamlining the mechanism for revival and restructuring of sick/incipient and weak CPSEs. Under these guidelines, the administrative ministries and departments are expected to take measures for revival of loss making CPSEs on a case-to-case basis.

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