Centre to Merge DPE & Dipam

Context:

The Union government is planning to merge the Department of Public Enterprises (DPE) with the Department of Investment and Public Asset Management (Dipam) under the Ministry of Finance.

• Goal: Improve efficiency, enhance CPSE performance, and streamline overlapping functions.

Key Questions

• Will the merged department emphasize:
  • Strategic management of CPSEs?
  • Or a more focused disinvestment agenda?
• There’s an apparent shift in government stance from aggressive disinvestment to value creation.

CPSE Policy Background

• As per the 2021–22 Budget, the government announced:
  • Minimal presence in strategic sectors
  • Privatisation or closure of CPSEs in non-strategic sectors
• Integration of DPE into the Ministry of Finance (2021) aimed to accelerate policy implementation, but limited progress has been made.

Disinvestment Track Record

• Inconsistent focus over the years:
  • Often pursued only to reduce fiscal deficit
  • Targets were ambitious but mostly unmet
• FY25 so far:
  • Over ₹3.7 trillion raised from overall equity markets (90% rise YoY)
  • Only ₹10,000 crore mobilized via disinvestment

Recent Trends

• No explicit disinvestment targets in recent Union Budgets
  • Offers operational flexibility
  • But risks neglecting disinvestment as a revenue source

Underlying Challenges

• Lack of political consensus is a core hurdle
  • Disinvestment often criticized as “selling family silver”
• CAG 2022 Report Findings:
  • 198 government companies with accumulated losses > ₹2 trillion
  • Net worth of 88 companies completely eroded
  • These entities are long-term fiscal liabilities

Merging departments may bring administrative clarity, but success hinges on strong political will and consistent execution. Without a firm disinvestment roadmap, India’s CPSE reforms risk stalling despite the structural overhaul.

BS