India is set to revamp over 200 state-run firms to boost profitability, steering away from Prime Minister Narendra Modi’s privatization efforts that have faced challenges. The plan, expected to be announced in the upcoming budget, includes selling unused land and assets, aiming to raise $24 billion in the current fiscal year.
The overhaul aims to set long-term performance goals for each company and introduce succession planning. The government also plans to train managers for senior roles and professionalize recruitment to company boards. The move is part of a shift towards enhancing the value of state-owned companies rather than focusing solely on asset sales.
Despite hurdles, the market valuation of state-run firms has seen a significant increase, with the BSE PSU index surging over 100% in the past year. Analysts believe the government could capitalize on the booming valuations by selling minority stakes in state-owned companies while maintaining majority control.
Overall, the reforms are expected to lead to higher profits, increased dividends to the government, and improved competitiveness of state firms. The government sees the response from the market as a vote of confidence in its reform agenda.
Published on 12 July 2024, 08:47 IST