New Delhi (05.02.2021): A new public sector policy has been evolving for a long time. Now it has been put in black and white. But it is sure to ignite Red backfire, which is seen as manageable in view of the Red losing the narrative of the modern world and working only on the primitive instinct of jealousy (it's nicknamed social and class justice) to push its untenable and rejected authoritarian political agenda.

The new public sector policy pivots on facilitating the participation of private and foreign capital in the areas that have a high potential for growth and multiplying jobs. All these areas, till now, have been monopolized and remained under state control leading to inefficiency in production and productivity and absolute inertia in innovation and technological upgradations.

Frightened as well as concerned by the abysmal pace of changes in the public sector leading to stagnation in employment creation and generation, the government has decided to cut back on its holdings even in what it calls the strategic sector with the proviso that "the bare minimum presence of the existing public sector commercial enterprises at Holding Company level will be retained under Government control. The remaining enterprises in a strategic sector will be considered for privatization or merger or subsidization with another PSE or for closure".

This implies that a lot of areas covered under the strategic sector will now be thrown open to private and foreign investments. The assumption is that this expansion in the scope of the earlier public sector policy may spur growth, modernization, and innovations.

A Cabinet direction issued on 27 January 2021 on the New Public Sector Enterprise ("PSE") Policy for Atmanirbhar Bharat defined and limited the strategic sector to Atomic Energy, Space and Defence; Transport and Telecommunication; Power, Petroleum, Coal and other minerals; and Banking, Insurance, and Financial Services.

The new tweak in the public sector policy has been deliberately not extended to certain classes of public sector entities such as not-for-profit companies, or CPSES providing support to vulnerable groups, or having developmental/ promotional roles, etc.

The latest changes to the strategic sector concept are further propelled by the Cabinet decision to consider PSES in non-strategic sectors for "privatization, where feasible, otherwise, such enterprises shall be considered for closure".

Laying down the procedures to be followed in implementing the Cabinet decision, the direction letter states: "NITI Aayog, in terms of the extant procedure, will make recommendations with regard to the CPSES under Strategic Sectors, that are to be retained under the Government Control or to be considered for privatization or merger or subsidiarization with another PSE or for closure. Their recommendations will be considered by the Core Group of Secretaries on Disinvestment (CGD). The Alternative Mechanism (AM) for strategic disinvestment, as approved by CCEA on 16.08.2017, comprising of the Finance Minister, Ministers of the Administrative Ministries concerned, and the Minister of Road Transport and Highways shall consider the recommendations of CGD and approve the CPSES to be retained under Government control or to be considered for privatization or merger or subsidiarization with another PSE or for closure".

This will be followed by DIPAM moving proposals for obtaining "In-principle' approval from the CCEA for strategic disinvestment of a specific PSE from time to time, on a case-to-case basis. The timing for specific transactions will, however, be contingent, inter alia, on the considerations of appropriate sequencing, sectoral trends, administrative feasibility, investors' interest, etc.

The direction letter makes it clear that "the ongoing transactions for strategic disinvestment of CPSES will not be affected by this policy and shall continue to be undertaken as per the extant procedure".

Among the classes of public sector entities kept out of the scope of the new PSE Policy for Atmanirbhar Bharat are entities in the nature of Development and Regulatory Authorities/ Bodies, Autonomous Organizations, Trusts, Development financing/ refinancing institutions, some of which have been created through the Acts of Parliament.

Major Port Trusts and Airport Authority of India created under the Acts of Parliament have also been kept out of new policy directions. Departments of the Government such as Railways and Posts that undertake commercial operations with a development mandate have also been excluded from the scope of the new policy.

Further, not-for-profit companies for various promotional purposes created under Section 8 of the Companies Act, 2013 (or Section 25 of Companies Act, 1956) or under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 are also out of bounds.

Also kept out are CPSEs concerned with the following purposes:

(a) providing support to vulnerable groups through the financing of SCs, STs, Minorities, Backward Classes, and Safai Karamcharis, etc, or, manufacturing aids and appliances for Divyang.

(b) assisting farmers in mainly getting access to seeds; promoting innovation in agriculture; or, procurement and distribution of food for the Public Distribution System.

(c) Security Printing and Minting.

(d) maintaining critical data having bearing on national security.

(By Rakesh Ranjan)