The Union Cabinet on May 18 approved a proposal to allow the board of directors of public sector undertakings (PSU) to recommend and undertake the disinvestment or closure of their subsidiaries, units, or stakes in joint ventures (JV).
Until now, while the boards could make equity investments to set up financial JVs and wholly-owned subsidiaries and undertake mergers and acquisitions subject to certain conditions. They largely had no control over the disinvestment and closure of their subsidiaries, units, or JV stakes.
"In line with the spirit of the new PSE (public sector enterprise) policy, 2021 to minimise the presence of government PSEs and for functional requirement, further delegation in this matter has been provided through this decision," the government said in a statement.
As per the public sector enterprises policy announced in 2021, central PSUs will maintain some presence in four sectors—atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; and banking insurance and financial services.
The cabinet on May 18 made the Alternative Mechanism responsible for reviewing the process of disinvestment and closure of units undertaken by PSUs.