States to get matching amounts from Centre for SPSEs' privatisation

To incentivise state governments for privatising state public sector enterprises (SPSEs), the Centre has promised to provide 100 per cent of the realised amount from such strategic disinvestments in FY23.

However, this will be on a first-come first-serve basis with a cap of Rs 1,000 crore for a state.

The Centre has allocated Rs 5,000 crore for disinvestment of SPSEs and asset monetisation. This is over and above the Rs 1 trillion interest-free capex loans to states for FY23.

In 18 pages of guidelines issued to states in April — which was reviewed by Business Standard — the finance ministry said such SPSEs should be under the majority ownership and management control of a state government or state and central governments together.

The organisation should also be subject to audit jurisdiction of the Comptroller and Auditor General (CAG).

In view of the higher multiplier effect of capital expenditure on growth and to provide resources to the states due to the pandemic, a “scheme for special assistance to states for capital expenditure” was first launched in FY21, earmarked with Rs 12,000 crore.

In FY22, the scheme was continued with Rs 15,000 crore allocation. The funds were disbursed under three heads in FY22 — Northeast and hilly states, general states and for incentivising states to divest SPSEs and monetise assets.

In case of disinvestment of SPSEs through minority stake sale, the latest guidelines said states will be given additional allocation equivalent to 50 per cent of the amount realised from such sale in FY23. This would be deposited in the consolidation fund of the state.

In case a state lists an SPSE in FY23 in any stock exchange or offers for sale the shares of already-listed SPSEs, it would be provided additional allocation under the scheme equivalent to 66 per cent of the amount realised.

To incentivise state governments to monetise assets, 50 per cent of the realised value of assets deposited — either in the state consolidation fund or in the account of the SPSE owning the assets — will be provided under the scheme.

The list of assets that states can monetise include roads, ports, airports, bus terminals, metro rail assets, desalination plants and other infrastructure assets. It is subject to approval of the Union ministry of finance.

“Monetisation of assets unlocks their value, eliminates their holding cost and enables scarce public funds to be deployed for new projects. The amount realised by the states/SPSEs from monetisation/recycling of assets should be used for capital expenditure only,” the guidelines said.

Centre’s promises

100% of realised amount to be given by Centre in FY23

Rs 1,000 crore cap amount given will be on a first-come first-serve basis

Rs 5,000 crore allocated for disinvestment and asset monetisation

50% of realised value of assets deposited to be provided