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Daily News Analysis

Explained: What is the government’s new policy on the strategic sector?

22nd July, 2020 Editorial


  • The government will soon come out with a policy on strategic sectors and simultaneously kick into motion a process of complete privatisation for companies in the non-strategic sectors.
  • First time since 1956 that the government has said, it will not have state-owned companies in the non-strategic sector.

General guidelines in Policy:

  • Reduction in the number of strategic sector.
  • Proposed policy would notify the list of strategic sectors requiring the presence of at least one state-owned company along with the private sector.
  • In all other sectors, the government plans to privatise public sector enterprises, depending upon feasibility.
  • The number of enterprises in strategic sectors will be only one to four.
  • Others companies would be privatised/merged/brought under a holding company structure.
  • The policy will put out a “general framework”.
  • Specific decisions, on which company is to be privatised, merged, or put under a holding company structure, would be taken later on.
  • Expected to be a long-term process rather than a one-time move on the privatisation of companies.

Help in Privatisation:

  • The government has already set in motion privatisation plans for large PSU companies BPCL, Air India, Container Corporation of India and Shipping Corporation of India.
  • The emphasis on privatisation could see companies in chemicals and infrastructure space being privatised.
  • Government has stated its intent to reduce the number of state-owned banks.
  • A holding company structure could also be used to house equity of smaller banks in one entity.

Reference: https://indianexpress.com/article/explained/explained-what-is-the-governments-new-policy-on-the-strategic-sector-6518415/