The Confederation of Indian Industry (CII) is ramping up pressure on New Delhi to fast-track the sale of public sector companies. In a bold move, CII leaders have urged policymakers to prioritize privatization, warning that delays are stifling India’s economic potential.
Public sector undertakings have long been a drag on resources, with many operating at losses despite taxpayer bailouts. CII’s latest report highlights how privatization could inject fresh capital, foster innovation, and create jobs through expanded operations under private hands.
‘It’s time to let market forces work their magic,’ declared CII President Sanjay Mehta during a virtual press briefing. He cited data showing privatized firms like Air India and BPCL subsidiaries outperforming peers in efficiency metrics post-transition.
Government plans to offload stakes in 25-30 PSUs have hit roadblocks due to valuation disputes, regulatory hurdles, and union protests. The 2024 budget speech reiterated commitment to privatization, yet concrete action remains elusive.
CII proposes a three-pronged strategy: strategic partnerships first, followed by full divestment; employee stock options to ease workforce transitions; and a dedicated privatization cell within the Finance Ministry for swift decision-making.
The timing is critical. With global investors eyeing India amid supply chain shifts from China, a robust privatization program could draw billions in FDI. Analysts predict it would also improve PSU governance, curbing cronyism and enhancing shareholder value.
Opponents argue privatization favors cronies over public interest, but CII counters with evidence from successful cases like VSNL and IPCL. As India aims for a $5 trillion economy, privatizing non-core assets is non-negotiable. The government’s response in the upcoming monsoon session will be watched closely by markets and industry alike.
