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Cabinet approves procedure and mechanism for Strategic Disinvestment

The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of Department of Investment and public Asset Management (DIPAM) for revision in the procedure and mechanism for strategic disinvestment.

Aug 17, 2017 12:06 IST
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The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of the Department of Investment and public Asset Management (DIPAM) for strategic disinvestment.

The meeting was chaired by Prime Minister Narendra Modi. The approval will help in the speedy completion of strategic disinvestment transactions.

Key Highlights

• The department would be setting up an alternative mechanism comprising Finance Minister, Minister for Road Transport and Highways and Minister of Administrative Department.

• The alternate mechanism would be given the charge of deciding on matters relating to terms and conditions of the sale from the stage of inviting of Express of Interests till inviting of financial bid.

• Besides this, CCEA will also empower the Core Group of Secretaries on Disinvestment (CGD) to take policy decisions with regard to procedural issues.

• The Core Group will also be allowed to consider deviations as necessary from time to time for effective implementation of decisions of CCEA.

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What is strategic disinvestment?

It means when a significant proportion of a Public Sector Unit’s (PSU) share and the management control goes to a private sector strategic partner.

The move is generally undertaken to mobilize more funds however, it is also to enable better use of the resource and its more efficient allocation.

 CCEA approves proposal to speed up strategic disinvestment

About DIPAM

• It is a nodal agency of the Union Ministry of Finance that has been authorised to advise the Union Government in the matters of the financial restructuring of PSUs and also for attracting investment through capital markets.

• The main vision of the agency is to promote people’s ownership of Central Public Sector Enterprises to share in their prosperity through disinvestment.

• It also aims to efficiently manage public investment in CPSEs in order to accelerate economic development and boost Government’s resources for higher expenditure.

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