India to ditch privatisation plans, pour billions in state-run firms

Indian Prime Minister Narendra Modi is pouring billions into ailing state-run firms after slowing ambitious divestment plans that were intended to reduce the state’s role in business, according to government sources, reported Zawya.

New Delhi has plans to invest about $1.5 billion in financial rescue packages for two state-owned firms as they failed to sell them to private companies.

The government also decided to put privatisation of at least nine state-owned units in “abeyance” after opposition from relevant ministries, according to a document that detailed recommendations of a government panel set up to identify privatisation candidates, which reviewed by Reuters, did not cite reasons for the decision.

According to the document, the nine companies include Madras Fertilizers, Fertilizer Corp of India, MMTC, and NBCC (India).

“Housing and Urban Development Corp, that was also identified for privatisation, has now been ‘exempted’ implying it will not be sold,” according to the document.

According to some sources, The government plans to invest approximately $230 million to $350 million in Pawan Hans to modernize its aging helicopter fleet following four unsuccessful attempts to sell the company.

In 2021, Prime Minister Narendra Modi’s government announced an ambitious privatization program aimed at reducing its role in state-run enterprises, including critical sectors like telecom and banking, where it planned to retain only a minimal presence while exiting all other industries. However, in a notable policy shift, the government is now planning rescue and revival initiatives for struggling companies, even those outside these sensitive sectors.

Last week, the government unveiled a $1.3 billion revival plan for the debt-ridden steel producer Rashtriya Ispat Nigam Ltd (RINL).

Additionally, budget documents for the current fiscal year reveal that 80 billion rupees have been allocated for bond repayments of the state-run telecom company MTNL, which has faced a series of recent defaults.

Sources:

Reuters https://www.reuters.com/world/india/india-ditch-privatisation-plans-pour-billions-state-run-firms-sources-say-2025-01-27/

Zawya https://www.zawya.com/en/world/indian-sub-continent/india-to-ditch-privatisation-plans-pour-billions-in-state-run-firms-sources-say-x4tglp3l

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