Longer term plan to improve performance of state-run companies important for government’s divestment, Kotak says in a report.
“In our view, the government may want to review its very ownership of PSU companies with a far bolder program of privatization,” note adds.
India targets $9.5 billion via privatisation this year to help plug its deficit.
Kotak adds that piece-meal divestments achieve little in terms of improving efficiency, returns for the government.
It says assets being converted into income to meet current expenditure without any consideration about the future not good.
Kotak believes it is best to put the money in separate funds that are used for current and future generations in a judicious manner.
Key divestments in pipeline:
- Oil and Natural Gas Corp
- Coal India
- Steel Authority of India
- Power Finance Corp
- Rural Electrification Corp