Union Government's Department Merger
The Union government is in the process of merging the Department of Public Enterprises (DPE) and the Department of Investment and Public Asset Management (DIPAM) within the Ministry of Finance to enhance the efficiency and performance of central public-sector enterprises (CPSEs).
Objective of the Merger
- Address the overlap in departmental functions.
- Determine focus on either managing CPSEs or disinvestment.
Public Sector Policy Shift
A new policy announced in the 2021-22 Budget stated the government's intent to minimize its presence in CPSEs, with a minimal presence in strategic sectors and privatization or closure in non-strategic sectors.
Challenges in Disinvestment
- Integration of DPE into the Ministry of Finance was expected to expedite policy implementation, but progress has been limited.
- Disinvestment has not been a sustained policy focus, although higher targets were sometimes set to reduce the fiscal deficit.
- Top officials emphasize value creation, possibly dominating future approaches.
Disinvestment Targets and Market Trends
- The government has stopped setting explicit disinvestment targets in the Union Budget.
- In 2024-25, overall equity market fundraising was ₹3.7 trillion, but government raised only over ₹10,000 crore through disinvestment.
Merits and Challenges of Disinvestment
- Could raise substantial revenue for asset creation and free state capacity.
- Lack of political consensus, with opposition viewing disinvestment as "selling the family silver."
Financial State of Government Companies
A 2022 report by the Comptroller and Auditor General of India highlighted 198 government companies with over ₹2 trillion in accumulated losses, eroding the net worth of 88 companies, increasing the exchequer's burden over time.
