Explained: What is the government’s new policy on the strategic sector?
Context:
- The government will soon come out with a policy on strategic sectors and simultaneously kick into motion a process of complete privatisation for companies in the non-strategic sectors.
- First time since 1956 that the government has said, it will not have state-owned companies in the non-strategic sector.
General guidelines in Policy:
- Reduction in the number of strategic sector.
- Proposed policy would notify the list of strategic sectors requiring the presence of at least one state-owned company along with the private sector.
- In all other sectors, the government plans to privatise public sector enterprises, depending upon feasibility.
- The number of enterprises in strategic sectors will be only one to four.
- Others companies would be privatised/merged/brought under a holding company structure.
- The policy will put out a “general framework”.
- Specific decisions, on which company is to be privatised, merged, or put under a holding company structure, would be taken later on.
- Expected to be a long-term process rather than a one-time move on the privatisation of companies.
Help in Privatisation:
- The government has already set in motion privatisation plans for large PSU companies BPCL, Air India, Container Corporation of India and Shipping Corporation of India.
- The emphasis on privatisation could see companies in chemicals and infrastructure space being privatised.
- Government has stated its intent to reduce the number of state-owned banks.
- A holding company structure could also be used to house equity of smaller banks in one entity.