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SPV of state-run companies may be tasked to redevelop land bank with sick PSUs

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New Delhi, Aug 29: The government may rope in state-run developers such as NBCC (India) Ltd to maximise value from the sale of sick and loss-making public sector undertakings (PSUs) that failed to generate suitable investor in the initial round of bidding.

As per a plan shared by the government officials privy to the development, non-core assets including land and buildings of several weaker PSUs may be handed over to specialised state-run agencies for redevelopment to realise higher value or for sale through a bidding process.

Redeveloped land may be offered to investors on lease while ownership of plant and machinery could be transferred completely.

The plan is to create an entity on the line land management agency that could be in the shape of a special purpose vehicle (SPV) with participation from experienced companies such as NBCC.

An approval for such agency may be taken from the cabinet.

The new measure is expected to end the almost dead run being encountered in the disinvestment of weaker PSUs including plans for strategic sale.

Sources said that the Department of Investment and Public Asset Management (DIPAM) has drawn up a plan for strategic sale in more than three dozen PSUs, including Air India, Air India subsidiary AIATSL, Dredging Corporation, BEML, Scooters India, Bharat Pumps Compressors, and Bhadrawati, Salem and Durgapur units of steel major SAIL.

The new measure to rope in agencies like NBCC will help some of these entities to get overall higher valuations as their operations would be restructured between core and non-core activities and then put up for sale, in some cases after redevelopment of land or other assets for commercial use.

The new measure would be different from Rs 6 lakh crore asset monetisation plan unveiled by the government where brownfield project in various sectors would be monetised by being in the private sector for management and development and operations of some these assets for a time bound contractual period.

The Centre had framed guidelines on closure of loss-making companies in 2016, under which a land management agency (LMA) was to be appointed by the administrative ministry or the CPSE’s board to assist in disposal of land.

In the new model, such activity could be taken over by another CPSE such as NBCC that can carry on the work of redevelopment on payment of a fee. The redevelopment work could include determining the current land use and its suitability for industrial, manufacturing or some other purposes.

Several sick PSUs are sitting on huge tracts of land that have the potential for providing huge gains after redevelopment and commercial sale. One such example is Indian Drug and Pharmaceuticals Ltd (IDPL) company that is sitting on 834-acre of prime land in Rishikesh.

“The land of a few sick PSUs could be commercially utilised by other cash-rich PSUs for their expansion plants or other activities. This PSUs-led disinvestment plan for sick units would work best,” said another government official.

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World Banks says agriculture and labour reforms will boost medium-term growth in India

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United Nations: The World Bank has marked India as the second-fastest growing major economy in the world which is expected to grow by 8.3 per cent in the present financial year. The World Bank’s Regional Economic Update suggests that after the “deadly second wave” of COVID-19 in India “the pace of vaccination, which is increasing, will determine economic prospects this year and beyond.”

“The trajectory of the pandemic will cloud the outlook in the near term until herd immunity is achieved,” the report cautioned. India’ gross domestic product (GDP) which shrank by 7.3 per cent (that is, a minus 7.3 per cent) under the onslaught of the pandemic last fiscal year is expected to record 8.3 per cent growth this fiscal year, which will moderate to 7.5 per cent next year and 6.5 per cent in 2023-24. These Updates were issued ahead of the World Bank’s annual meeting next week,

The COVID-19 pandemic contracted not only India’s economy but also the global economy in fiscal year 2020-21 despite well-crafted fiscal and monetary policy support in India. However, growth recovered in India in the second half of the last fiscal year driven primarily by investment and supported by unlocking’ of the economy and targeted fiscal, monetary and regulatory measures. Manufacturing and construction growth recovered steadily.

Although significantly more lives were lost during the second wave of the epidemic this year in India, compared to the first wave in 2020, “economic disruption was limited since restrictions were localised,” with the GDP growing by 20.1 per cent in the first quarter of the current fiscal year compared to the first quarter of 2020-21. It attributed the spurt to “a significant base effect” (that is, coming off a very big fall in the compared quarter), “strong export growth and limited damage to domestic demand.”

The Bank’s Update said that successful implementation of agriculture and labour reforms would boost medium-term growth while cautioning that weakened household and firm balance sheets may constrain it.

The Production-Linked Incentives (PLIs) scheme to boost manufacturing, and a planned increase in public investment, should support domestic demand. The extent of recovery during the current fiscal year “will depend on how quickly household incomes recover and activity in the informal sector and smaller firms normalises,” the report says.

Among the risks included, worsening of financial sector stress, higher-than-expected inflation constraining monetary-policy support, and a slowdown in vaccination. The Indian government has taken steps to strengthen social safety nets and ease structural supply constraints through agricultural and labour reforms deal with the inequality. It said that the government continued investing in health programmes “have started to address the weaknesses in health infrastructure and social safety nets (especially in the urban areas and the informal sector) exposed by the pandemic.

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Government clarifies that Air India employees to be retained for a year

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New Delhi: After the sale of Air India to Tata Sons, the future of its employees was a big concern. As per the deal, all the existing employees of Air India will have to be retained for one year after the privatisation.

The government of India on October 8, 2021 has made it clear by setting a precedent for all public sector undertakings (PSU). Tatas have won the bid to acquire the debt-ridden national career Air India offering Rs 18,000 crore for acquiring 100 per cent shareholding. Tatas beat SpiceJet promoter to bag the deal.

Tuhin Kanta Pandey, secretary to the Department of Investment and Public Asset Management (DIPAM), said that Tatas’ bid of Rs 18,000 crore comprises taking over of Rs 15,300 crore of debt and paying the rest in cash. Both bidders had quoted above the reserve price. Pandey said that transaction was planned to be closed by December. A group of ministers comprising Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia has cleared the winning bid for Air India on October 4.

This marks the return of Air India to the Tatas. Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. It was called Tata Airlines then. In 1946, the aviation division of Tata Sons was listed as Air India and in 1948, Air India International was launched with flights to Europe. The international service was among the first public-private partnerships in India, with the government holding 49 per cent, the Tatas keeping 25 per cent and the public owning the rest.

In 1953, Air India was nationalised. The government is selling 100 per cent of its stake in the state-owned national airline, including Air India’s 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.

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Air India goes to Tata Sons, Ratan Tata tweets, Welcome Back!

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New Delhi: Finally, Air India has gone to Tata Group which emerged the highest bidder. This was a much-awaited deal for the Government of India which wanted to sell this national career from a very long time. Welcome back, Air India, tweets Ratan Tata on Tata Sons winning the bid for Air India.
An SPV of Tata Sons – the holding company of conglomerate – has emerged as successful bidder, Tuhin Kanta Pandey, secretary to the Department of Investment and Public Asset Management (DIPAM) — the government department responsible for privatisation, said.

The international service was among the first public-private partnerships in India, with the government holding 49 per cent, the Tatas keeping 25 per cent and the public owning the rest. In 1953, Air India was nationalised. The government is selling 100 per cent of its stake in the state-owned national airline, including Air India’s 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.

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