Sitharaman: Disinvestment In PSUs To Raise Capital For Infrastructure Building

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Finance Minister Nirmala Sitharaman said that govt is pursuing disinvestment to inject greater transparency & discipline in loss-making public sector companies

Written By Digital Desk | Mumbai | Updated On:

The Union Finance Minister Nirmala Sitharaman on Friday said that the government is pursuing disinvestment to inject greater transparency and discipline in loss-making public sector companies. She also mentioned that at the same time, funds raised by privatising state-owned firms will be used for creating and upgrading infrastructure across the country, which will stimulate consumer demand and create long-term assets.

Sitharaman said the listing of companies on stock exchanges disciplines a company, provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created, she said while addressing industry leaders at a post-Budget interaction organised by the Ministry of Finance.

For the next financial year 2020-21, the disinvestment target includes Rs 90,000 crore to be raised from an initial public offer in Life Insurance Corporation (LIC) and a stake sale in IDBI Bank. The government has been bullish on privatising loss-making companies like Air India while other companies can opt for strategic disinvestment or get listed to diversify ownership.

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Further, she said that the Centre is also expected to divest stakes in Bharat Petroleum Corporation Ltd (BPCL), Container Corporation of India (Concor) and Shipping Corporation of India (SCI) soon. The aggressive disinvestment target is also the basis for the government to contain fiscal deficit at 3.5 per cent of gross domestic product (GDP) in FY21.

It had to let fiscal deficit slip from 3.3 per cent estimated earlier to 3.8 per cent in the revised estimate presented in the Union Budget 2020. Besides stimulating the rural economy, said Sitharaman, the Budget lays a clear emphasis on commerce and industry with measures like staggering tax burden for start-ups.

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'Budget 2020 a Roadmap'

"Budget 2020 sets a roadmap for the next five years keeping macroeconomic fundamentals in mind. We made sure that the demand for increasing consumption and investment in long-term asset building is taken up," she said.

Meanwhile, Revenue Secretary Ajay Bhushan Pandey said the new system announced in the Budget is simple and gives more choice to taxpayers. Foreign investors can opt not to file tax returns in India if they let go of tax treaty benefits. As per most of the tax treaties, the tax rate on royalties and technical fees paid to investors outside India is at 10 per cent.

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(with ANI inputs)

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