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What is Strategic sale? What is the role of NITI Ayog and DIPAM in strategic sale?

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What is Strategic sale? What is the role of NITI Ayog and DIPAM in strategic sale?
posted Aug 22, 2017 by Shamita

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In the budget 2016, the Government has proposed strategic sale or strategic disinvestment of PSEs for reviving them as well as to mobilize fund form the sale of shares of PSEs. In the near future, the strategic sale route where a considerable proportion of the shares of a PSE is transferred to a private sector investor will be adopted. This is another form of restructuring the PSEs just like the disinvestment route.

What is NITI Ayogs’s role in strategic sale?

After budget 2016, the Finance Ministry has empowered the NITI Ayog to advise the Government on strategic disinvestment of CPSEs. It will do the following functions with regard to strategic sale.

  • It will identify the CPSEs for strategic disinvestment.
  • It will advise the government on mode of sale and percentage of shares to be sold; and
  • It will suggest methods for valuation of the CPSE.
  • The above responsibility of the NITI Ayog means it has to initiate the process of strategic disinvestment of CPSEs.

The budget has given power to the NITI to identify public sector companies for strategic sale. In June 16. 2016, the NITI has prepared a report on CPSEs and suggested 32 PSUs for strategic sale including CPSEs. It has also suggested the winding up of 26 CPSEs out of the total 74.

What is the role of DIPAM in strategic sale?

After the NITI Ayog’s suggestions, Department of Investment and Public Asset Management (DIPAM) is finalizing a model for strategic sale of shares of PSEs.

Earlier the government has approved the proposal of DIPAM for laying down the procedure and mechanism for strategic disinvestment of Central Public Sector Enterprises (CPSEs). Hence, the procedure for strategic sale will be prepared by DIPAM.

answer Aug 24, 2017 by Abhishek Maheshwari