Cabinet gives approval for 26% strategic sale in BEML

Sneha Gilada 

Even as the opposition reprimands the government's disinvestment plans that are likely to jeopardize thousands of jobs, defence equipment manufacturer Bharat Earth Movers (BEML) notified the stock exchanges that the cabinet has given an 'in-principle' approval for the strategic disinvestment of 26% equity shares out of the government’s shareholding of 54.03%. 

In the centre's bid to offload its poorly performing PSUs to the private sector, BEML is the first major PSU to go through disinvestment via a strategic sale. The sale is expected to deposit over 1000 crores into the exchequer's coffers. Only three such strategic sales have taken place in the last 12 years. 

This privatisation hopes to bring efficiency, professionalism and improved performance in the functioning of enterprise alongside much-needed revenue. 

Of the Rs 56,500 crore revenue that the government is targeting in disinvestment proceeds this financial year, Rs 36,000 crore is to come from minority stake sale in PSUs and another Rs 20,500 crore from strategic stake sale.  

With total collections of around Rs 24,000 crore in the first nine months of the financial year, the target is far from being met. Going by the recommendations made by NITI Ayog in October 2016, we are likely to see many more strategic sales this year. 

Taken aback by such drastic privatisation measures, trade unions have expressed concern and retaliated by threatening to go on strike. Baij Nath Rai, from Kolkata, President of Bhartiya Mazdoor Sangh, speaking to the correspondent of The Dollar Business said, "We are against privatisation because this is a question of employment. The government cites losses as the reason. But these losses are bureaucratic in nature, and not resulting from the company's inefficiency. Selling stakes is not a solution." 

"Nine PSUs have been targeted. We hope to peacefully negotiate with the government. Only when that doesn't yield results will we go on strike," he added. 

While many are of the opinion that the post-demonetisation scenario is not suitable for disinvestment, the government is pursuing the route to cut fiscal deficits without having to compromise on government spending, which contributes heavily to GDP growth. Threats of a nation-wide strike from trade unions will further test Prime Minister Narendra Modi's resolve to fulfil the disinvestment target.