The Cabinet Committee on Economic Affairs chaired by the Prime Minister, Narendra Modi has given ‘in principle’ approval for strategic disinvestment of equity shareholding of Minerals & Metals Trading Corporation (MMTC) (49.78%), National Mineral Development Corporation (NMDC) (10.10%), MECON (0.68%) and Bharat Heavy Electricals (BHEL) (0.68%) and two Odisha State Government PSUs namely; Industrial Promotion and Investment Corporation of Odisha (IPICOL) (12.00%) and Odisha Mining Corporation (OMC) (20.47%) in Neelachal Ispat Nigam (NINL) to a strategic buyer, identified through a two-stage auction procedure.
Give the investor response to primary issues in recent times, particularly government-owned firms, divestment decision seems to have come at the right time. This will also help the government to generate finances at a difficult time when GDP growth rate, GST collections are falling which is expected to have a negative impact on fiscal deficit.
The government has set a divestment target of Rs 1.05 lakh crore during the current fiscal. It has already breached the budgeted fiscal deficit gap and the extent of the gap stands at 115% with two months to go.
The government, which had exceeded the budgeted divestment target last fiscal, has mopped up only Rs 12,359 crore so far. Also, the BPCL, Air India stake sale plan is hitting the roadblocks. Apparently, the urgency to conclude the divestment process is very high. Meanwhile, the proposed strategic divestment in MMTC, NMDC, BHEL, MECON, others particularly NINL would unlock resources to be used to finance the social sector/developmental programs of the Government benefiting the public. It is also expected that the successful strategic buyer may bring in new management, technology, investment for the growth of the company and may use innovative methods for the development of the business operations of the company, which may generate more employment opportunities.
NINL is a Joint Venture company, in which four CPSEs namely MMTC, NMDC, BHEL and MECON and 2 State PSUs of Odisha Government, namely IPICOL and OMC are shareholders.
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