As Budget 2025 approaches, the Indian government’s previously announced strategic disinvestment plan for public sector undertakings (PSUs) appears to be in limbo. Initially propelled by the philosophy that “government has no business being in business,” significant privatisations, including high-profile entities such as Air India and Neelachal Ispat Nigam Ltd—both now under the Tata Group—were set in motion in Budget 2022. However, the promised sweeping privatisation has largely stalled, with only these two sales coming to fruition. The government’s retreat from an aggressive privatisation agenda is not solely due to its slimmed down majority in Parliament post-elections, which has made the privatisation agenda—a politically sensitive issue less tenable. More crucially, it has been the unexpected robust performance of several PSUs. These entities have not only managed their capital efficiently but have also outperformed their private counterparts, yielding higher revenues and dividends. This performance enhancement provides the government a strategic cushion to reconsider its approach, particularly with entities like BPCL, where the government found the valuation to match almost a year’s profit, making a sale unattractive.

While the government remains cautious, shifting focus to less contentious incremental stake sales or minor disinvestments which do not involve a transfer of management control, the economic implications are vast. The burgeoning market capitalisation of listed PSUs, which has grown significantly, presents an opportune moment for the government to offload minority stakes and bolster its capital receipts, aiding in funding expansive capital expenditure plans aimed at stimulating overall economic growth. From an educational perspective, as a teacher of English for competitive banking exams in India, I observe the profound impact of such fiscal policies on students. The uncertainty surrounding the privatisation of public sector banks and their merger activities can indeed be disheartening. Such changes suggest a shaky future for those aspiring to secure government bank jobs, a significant career path for many of my students. It’s essential for the government not just to rethink its disinvestment strategy but also to focus on enhancing the operational efficiencies of these banks. Reducing non-performing assets and improving performance through better management practices are critical. These steps would not only stabilise the banks but also restore confidence among young aspirants preparing for bank exams. The government’s dual approach of managing privatisation sensitively while bolstering the operational strength of its banks could provide the stability and growth needed in this vital sector.

By Vishal Parihar Sir

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