Finance ministry following a calibrated disinvestment strategy

The finance ministry on Monday said it’s following a “calibrated disinvestment strategy” through the listing of central public sector enterprises (CPSEs) as well as gradual dilution of minority stakes via the stock market, aligned with interest of minority shareholders.

It has adopted a “holistic public asset management strategy” and every CPSE is being “driven to create value for itself, its employees, shareholders and the broader economy”, the ministry said in a post on microblogging site X.

The enhanced focus on value creation in recent years is reflected in the combined market capitalisation of listed CPSEs, which has grown nearly 3.6 times in the last three years to Rs 44.41 lakh crore, way outpacing the performance of the Sensex and Nifty, it said.

The Department of Investment and Public Asset Management (DIPAM) has raked in Rs 8,625 crore so far this fiscal year from the dilutions of a part of its stakes in General Insurance Corporation of India (Rs 2,346 crore), Cochin Shipyard (Rs 2,015 crore) and Hindustan Zinc (Rs 3,449 crore).

From this fiscal, the government has stopped declaring a separate disinvestment target. Instead, it announced a combined divestment and asset monetisation goal of Rs 50,000 crore for 2024-25.

The ministry said improved performance of CPSEs has been achieved through realignments of management incentives. They are encouraged to pay dividends to shareholders regularly while retaining sufficient resources for their own capital expenditure and growth.This policy, introduced in November 2020, has significantly increased their dividend payouts to the government. Dividend collections by DIPAM had scaled a new peak of Rs 63,749 crore in 2023-24, beating the revised estimate (Rs 50,000 crore) for a third straight year and partly offsetting the shortfall in the disinvestment revenue. The mop-up has risen from just Rs 39,750 crore in 2021-22.“By ensuring holistic value creation in Central Public Sector Enterprises, DIPAM ensures performance enhancement, capex growth, and trust-based asset creation for investors,” it added.