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.
