Global Economy

Covid second wave may impact government's privatisation drive


(This story originally appeared in on Apr 19, 2021)

The sharp surge in Covid cases in the country has cast fresh shadows of uncertainty over the government’s privatisation drive and it is likely that some high-profile stake sales may get delayed.

The Centre has made privatisation of state-run firms a key policy priority and it is seen as a major source of much-needed funds for the government, which is battling a tough situation with the spiralling of Covid cases. Experts reckon that localised lockdowns are also expected to hurt the economic recovery that is underway.

Several key stake sales are in an advanced stage — Air India, BPCL,

and BEML sales are scheduled to be completed in the current financial year. But experts say the second wave of the pandemic is likely to hamper the process as various stakeholders may prefer to wait till there are some signs of cooling down in the infection numbers.

Business

Last year, the coronavirus outbreak had hurt roadshows for the strategic sale in Shipping Corporation and the department of investment and public asset management (Dipam) had held virtual meetings with investors in Hong Kong and Singapore. But the pandemic-induced lockdowns, along with choppy markets, had an impact on the entire asset sales drive. Shipping Corporation has moved to the second stage with multiple bids already received for the sale.

The government has expressed confidence that several of the key transactions are likely to be completed. But with the government’s attention focussed on combating the fresh surge and investor mood likely to be swayed by jump in cases, experts say, it would be tough road ahead for privatisation.

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Apart from the pending asset sales, there is also a long line of privatisation decisions that are likely to be approved. Government think tank NITI Aayog has approved the names for privatisation of two banks, one insurance company and 7-8 other state-run companies. The proposed IPO of the country’s largest insurer LIC is also making progress. Moves are also afoot to cut the decision-making time to fast-track asset sales.



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