“We are working out the incentives… We could match up the disinvestment receipts raised by them,” a senior government official told ET.
The official said the incentives would be finalised soon after the passage of the budget by Parliament. Finance minister Nirmala Sitharaman had said in her budget speech the Centre would incentivise disinvestment by states.
“To similarly incentivise states to take to disinvestment of their public sector companies, we will work out an incentive package of central funds for states,” she had said on February 1.
The Centre’s approach of linking reforms by states to additional borrowing has yielded good results. As many as 12 states have implemented ease of doing business reforms to avail of the additional borrowing window and the Centre’s view is that this could work with disinvestment as well.
The government has identified privatisation as a key focus area, with the new public sector policy setting out four areas as strategic where a bare minimum of central public sector enterprises will be maintained and the rest privatised. In the remaining sectors, all CPSEs will be privatised.
The Centre is keen that the states also pursue the policy framework to free up resources that could be put to more productive uses, including building infrastructure.