The sale of national carrier Air India to conglomerate Tatas has opened the way for faster privatisation of state firms and also the government is on target to list life assurance Corporation (LIC) early next year, a top government official said on Tuesday.
Tuhin Kanta Pandey, spearheading the drive to sell state enterprises or shut them down, said the govt. hoped to finish the valuation exercise of LIC by November-December before filing the draft red herring prospectus for the IPO planned by March.
Prime Minister Narendra Modi’s government is trying to reinvigorate the economy after its deepest contraction in decades through market-oriented changes and hoping to lure investment faraway from China and other countries.
Pandey said the accommodate Tatas to sell Air India for $2.4 billion was complex and long within the making but provided confidence for the divestment of other state assets. A previous attempt in 2017 to sell the carrier that has been losing a billion dollars a year had failed.
“It has now come to fruition, it’ll provides a fillip to privatisation going forward,” he said, adding that government managers were building expertise and knowledge to handle state sales.
“Selling state assets isn’t easy,” he said.
Several previous attempts at privatisation had only made fitful progress, wedged in bureaucratic tangles and resistance from politicians and unions.
But the Modi government had now fully embraced privatisation because it didn’t have the fiscal space to sink billions of rupees into loss-making state enterprises while trying to satisfy demands to create infrastructure and maximize welfare funding, he said.
“We feel the private sector has come old, also the broader philosophy is it’s not the business of state to be in business,” he said, adding that technology was changing too fast and corporations constantly required funds for growth.
The government is predicted to sell a 5-10 per cent per cent stake in LIC and lift around 900 billion rupees in what may well be India’s biggest listing. the corporate has long been considered a strategic asset, commanding over 60 per cent of India’s insurance market with ₹ 36 trillion of assets under management.
“This goes to be a significant piece of reform,” Pandey said.
