News: In the upcoming winter session of Parliament, ‘The Banking Laws (Amendment) Bill, 2021’ to be proposed, will facilitate the transfer of ownership of two PSBs, by making changes in concerned laws.
In the last session of Parliament, GoI said privatisation was ongoing in the case of 21 PSUs. The exercise was completed in the case of one of them, Air India.
What is the need for privatization?
Privatization is essential to redeploy public resources in areas such as education and healthcare.
It helps PSUs get the benefit of additional capital and a clear approach to business, thereby helping the economy.
PSU staff will be beneficiaries of it.
A few big-ticket privatisations will convey to stakeholders about the reformist spirit of the economy.
What are the challenges?
PSBs have carried the burden of the NPA problem. Any potential buyer will need GoI to absorb some NPA.
Loss-making PSUs, burdened by debt and staffed by an unionised workforce, make it tough to privatise. The privatisation of ‘Air India’ is an example.
Source: This post is based on the article “Privatise Post-Repeal: Selling sarkari banks & PSUs is critical” published in Times of India on 25th November 2021.