Coinciding with the Cabinet reshuffle, the department of public enterprises (DPE) has now been made part of the finance ministry in what is seen as a move to speed up the privatisation process and exercise greater financial control over state-run enterprises.
For years, DPE was part of the ministry of heavy industries, with a separate department carved out for public enterprises. During the Atal Bihari Vajpayee and Narendra Modi regimes, the two departments had a common minister, usually a BJP ally.
On Tuesday, the Cabinet Secretariat amended the allocation of business rules and moved DPE under the direct control of finance minister Nirmala Sitharaman, who also has the department of investments and public asset management (Dipam) under her charge. In fact, a few years ago, part of the business with DPE was also transferred to Dipam as the Modi administration sought to use innovative financial instruments to mop up more resources from public sector companies.
The department will oversee the functioning of 36 PSUs, apart from issues such as heavy engineering and automobiles, providing the finance minister direct oversight over policies related to some key manufacturing sectors.
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The change comes at a time when the Centre’s privatisation programme is moving slower than expected, partly due to the second wave of Covid. Besides, a tighter leash over public sector enterprises will enable the finance ministry to extract more funds just when it is short on resources. Additionally, it can push through spending and other decisions at a time when boosting capital expenditure has been a key focus area.
The finance ministry has grown into a mega ministry over the last few years with Dipam (the disinvestment department, in its earlier avatar), while the department of financial services grew from being a division in the ministry to an independent department. Besides, in 2014, Modi had added corporate affairs ministry to the FM’s portfolio, which originally comprised the departments of revenue, expenditure and economic affairs. Now, the FM will have six secretaries reporting to her, apart from the chief economic adviser.
On Tuesday, the Cabinet Secretariat had also announced the establishment of the ministry of cooperation.
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