homeeconomy NewsEconomic survey 2020 presses for privatisation, says performance of PSUs improved after govt exit

Economic survey 2020 presses for privatisation, says performance of PSUs improved after govt exit

Economic survey 2020 presses for privatisation, says performance of PSUs improved after govt exit
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By CNBC-TV18 Jan 31, 2020 2:32:37 PM IST (Updated)

The aim of any privatization or disinvestment programme should be the maximisation of the government’s equity stake value, the Survey said.

In the Economic Survey 2020 tabled on Friday,  government said privatisation unlocks the potential of central Public Sector Enterprises (CPSEs) to create wealth. The aim of any privatization or disinvestment programme should be the maximisation of the government’s equity stake value, the Survey said, adding that privatised government firms performed better than their peers in their respective sectors.

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The survey analysed the before and after performance of 11 CPSEs that had undergone strategic disinvestment from 1999-2000 to 2003-04.
The approval of strategic disinvestment in Bharat Petroleum Corporation Limited (BPCL) led to an increase in value of shareholders’ equity of BPCL by Rs 33,000 crore when compared to its peer Hindustan Petroleum Corporation Limited (HPCL).
This reflects an increase in the overall value from anticipated gains from consequent improvements in the efficiency of BPCL when compared to HPCL which will continue to be under government control, the Survey said.
The privatised CPSEs, on an average, perform better post privatisation than their peers in terms of their net worth, net profit, return on assets (ROA), return on equity (RoE), gross revenue, net profit margin, sales growth and gross profit per employee, the survey added.
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