India to Privatise Loss Making PSU’s

In a significant announcement, Indian finance minister Arun Jaitley said the government is open to privatisation of certain loss-making state-owned companies.

Speaking at the India Economic Summit organised by the World Economic Forum and Confederation of Indian Industry, he said “Certainly, I would be interested to look at some PSUs (which) could do much better in private hands as Taxpayers can’t continue to pay for loss-making businesses.”

For now, however, the government will stick to selling minority stake in profit-making public sector undertakings (PSUs).

Jaitley also promised more initiatives including reforms in the mineral sector along the lines of the recently-announced plans of coal block auction.

He added the government also plans to open railways further to private investment, ease restrictive land purchase rules, relax labour laws and raise the foreign investment ceiling for insurance companies.

Last month, the government had announced plans to put up coal mines for bidding by private steel, power and cement companies and introduce changes in the law to enable commercial mining in the future, signalling its intent to fully open the sector to private players.

The new auction-based system will replace the earlier controversial policy of allotting coal blocks based on recommendations of a panel of bureaucrats, which the Supreme Court had struck down as arbitrary. The Court had recently cancelled 214 blocks allotted since 1993, a move that threatened a nascent economic recovery.

The finance minister assured investors more reforms in the coming months including plans to ease rules for the industry to buy land for setting up factories.

Over the last five months, the Narendra Modi-led government has unveiled a string of measures to turn India into a manufacturing powerhouse, remove bureaucratic sloth, make the country more investor-friendly and aid its economic recovery.