By slowing down the ambitious disinvestment plan, the central government is now investing heavily in sick government companies. Sources associated with the government and a document obtained by Reuters show that apart from the goal of reducing the role of the government in business, the Narendra Modi government is now emphasizing on reforming the public companies.
In less than a month’s time in 2025, the central government has planned a relief package of about $1.5 billion to rescue two state-run firms which it had failed in its attempts to sell to private companies. The government has decided to postpone the privatization of at least 9 government units, which were opposed by the concerned ministries. The documents seen by Reuters do not provide reasons for the decision.
According to the document, these 9 companies include Madras Fertilizers, Fertilizer Corporation of India, MMTC and NBCC (India). Housing and Urban Development Corporation was also marked for privatization, according to the document it will no longer be sold.
Helicopter operator Pawan Hans is among the government companies to be revived with government funds. Two sources associated with the government said that the government is planning to invest 23 to 35 crore dollars in Pawan Hans, so that its old fleet can be modernized. 4 attempts to sell this company have failed. A source said the amount to be invested is yet to be decided as options for fleet modernization, including acquisition and leasing, are being considered.
The Ministry of Finance and Civil Aviation did not immediately respond to the information sought through e-mail regarding the privatization plan or investment in Pawan Hans. Last week, the government had announced a $1.3 billion package for the revival of debt-ridden steel production company Rashtriya Ispat Nigam Limited (RINL). According to the current year’s budget documents, the government has allocated Rs 80 billion in 2024-25 for bond repayment of state-owned telecom company MTNL.
privatization sluggish
After 4 years of announcing the policy of privatization, Modi government got only 3 successes. The biggest achievement in this was the sale of Air India to Tata Group. The stake of steel maker Neelachal Ispat Nigam Limited was sold to Tata Steel and the stake of Ferro Scrap Corporation was sold to Konoik Transport Company.
All other major sales have either been postponed or delayed. This change in policy was due to the hope that some of the larger government companies could be turned around and made more profitable, which would yield higher dividends for the government.