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Centre to begin asset monetisation of PSEs

The plan now is to create a special purpose vehicle (SPV) under the government route that could take the shape of an AMC/ARC and help to maximise value of assets of PSEs

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New Delhi: The Centre proposes to prod States to initiate asset monetisation of State public sector enterprises (PSEs) by setting up specialised asset management (AMC) and asset reconstruction companies (ARC).

The idea is to expand the scope of government's asset monetisation exercise and enable State entities to unlock value for the next round of the investment that will help generate growth and employment.

AMC and ARC or a bad bank has been proposed for the banking sector in Budget 2021-22 to acquire, manage and turnaround bad loans. The Budget also talked about asset monetisation to unlock the true value of assets lying with government entities.

The plan now is to create a special purpose vehicle (SPV) under the government route that could take the shape of an AMC/ARC and help to maximise value of assets of PSEs. Similarly, exercise is now being thought as State level, where State specific AMC/ARC could do the same thing for local enterprises. As per the plan being finalised by the Centre, assets may first be transferred to the proposed SPV which will then devise a plan to improve it before finding a strategic buyer and completing the transaction.

Earlier speaking to IANS, disinvestment department DIPAM secretary Tuhin Kanta Pandey had said that the SPV could look at monetising non-core assets of PSEs that are unable to undertake the work on their own and help them realise better value for assets that are unutilised or underutilised or are just lying idle without generating any revenue.

This would also mean that States, which are unable to undertake asset monetisation on its own, could consider taking the help of the Central SPV. In any case, both central and State SPV are proposed to work in close coordination to see that State assets get maximum value.

Asset monetisation is the process of creating new sources of revenue for the government and its entities by unlocking the economic value of unutilised or underutilised public assets. A public asset can be any property owned by a public body, roads, airports, railways, stations, pipelines, mobile towers, transmission lines, etc. or even land that remains unutilised.

The disinvestment department DIPAM has already asked all government bodies and PSEs to identify a list of assets that needs to be monetised.

Subhash Narayan
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