Statement in RS signals policy shift, follows scaling down of disinvestment plans.
In what could be seen as a policy shift, Prime Minister Narendra Modi on Wednesday said the central public sector undertakings (CPSEs) had gained in strength over the last decade, with “most of them giving record returns (dividends and rise in valuation)” to the stakeholders. Investors have reposed their faith in CPSEs, thanks to the NDA government’s “efficient management of these entities in the last ten years,” he said in the Rajya Sabha.
“Investors’ confidence is rising in PSU stocks. In the last one year, the BSE PSU index has doubled,” Modi said. “Today LIC shares at a record level,” Modi said taking potshots at the Opposition whom he blamed for spreading misinformation about the insurer.
The prime minister’s comments comes on the heels of the government scaling down its disinvestment targets for the current year and the next, and even dispensing with a separate receipts head for disinvestment in the interim Budget presented in Parliament last week. In post-Budget interviews to FE, senior finance ministry officials stressed the strategy is to bolster the CPSEs, before considering any sell-offs.
In the Budget FY21-22, the Modi government had unveiled the strategic sector policy which entailed that the government would have a minimum presence in the four broad sectors while the state-owned firms in the remaining ones can be privatised or merged or closed. In the non-strategic sector, all CPSEs will be privatised or closed in case of privatisation is not possible, according to the policy. The prime minister’s comments now mark a departure from this.
The market capitalisation of listed CPSEs and government banks/financial institutions increased fourfold from Rs 9.5 trillion in January 2021 to Rs 38 trillion now. This has benefited the government and minority shareholders equally.
“Ten years ago, PSUs’ net profit was around Rs 1.25 trillion, now PSUs making Rs 2.5 trillion profit (annually),” Modi said. In the past ten years, PSUs’ net worth (excluding banks) rose from Rs 9.5 trillion to Rs 17 trillion, he added.
“The Congress party said we sold PSUs, deteriorated their condition. Recollect who destroyed BSNL, MTNL and when. What was the condition of Hindustan Aeronautics (HAL)? Who destroyed Air India?” Modi asked. “Congress and UPA can’t disown the damage they did to the public sector (between 2004 and 2014).”
With record manufacturing, HAL’s revenues are at a record high while BSNL is in a much better shape with 4G and 5G implementation.
During the intra-day trade, LIC share price touched a new record at Rs 1,050 (52 Week High) on Wednesday. The IPO issue price was Rs 949 on May 17, 2022. Since its listing on the stock exchanges, LIC stock moved down before falling as much as 44% to Rs 530 on March 29, 2023.
Replying to the debate on the Motion of Thanks on the President’s Address in Rajya Sabha, Modi again expressed confidence in winning a third consecutive term and outlined his vision for the next five years, saying the Modi 3.0 government will put all its might into making India a developed nation.
“The third term of our government is not far away. Some people call it Modi 3.0. Modi 3.0 will put its all might to strengthen the foundation of ‘Viksit Bharat’,” he said.
In his 90-minute speech, considered his last in Parliament before Lok Sabha polls, Modi elaborated on his vision for the next five years. He said all flagship programmes like PM Kisan, PM Awas Yojna, free ration, Ayushman Bharat, and cheaper medicines (Jan Aushadhi Kendra), would continue.
The prime minister said the medical treatment will become more accessible and cheaper. He promised to cover the entire nation with the piped gas network, provide tap water in poor households, and no power bill through the use of solar power.
Modi said India will see more startups, one lakh unicorns, a record number of patents, the best universities, greater participation in international sports, transformation in public transportation, and bullet trains.
In Modi 3.0, the prime minister said, India will be extensively using AI, nano-fertilizers, green technologies, natural farming and super food. He said India will make remarkable progress in the semiconductors sector, electronic goods, and green hydrogen.
Modi said his first two terms have gone in removing and grappling with the problems that gripped the nation due to the long rule of the Congress, which he alleged knew of the “disease” but did nothing to resolve it. “Vikshit Bharat is not a wordplay, but it is our commitment,” Modi said.
“The country will not listen to those whose warranty has expired. The one who has shown the power of guarantee will be trusted by the nation,” Modi said in his speech in Hindi.
Source:financialexpress.com