The government is focusing on privatisation as strategic divestment and may lead to significant re-rating of the public sector enterprises stocks.
Moreover, the BSE PSU index surged around 26 percent compared to an 8 percent rise in the benchmark Sensex post Budget 2021.
Further, the government is aiming to set the disinvestment target for FY22 at Rs 1.75 lakh crore.
However, strategic divestment will strongly boost the PSU stocks that have a significant valuation comfort.
Multiple strategic disinvestments that the NDA government undertook include Hindustan Zinc, IBP, VSNL, IPCL, etc.
This led to significant asset value unlocking and therefore re-rating the entire PSU basket.
Prime Minister Narendra Modi attended a webinar that the Department of Investment and Public Asset Management organised on February 24.
He strongly pitched for the privatisation of Central Public Sector Undertakings and monetisation of underutilised and unutilised assets.
Privatisation, except strategic sectors has the potential to proffer wide array of exciting opportunities.
This includes boosting of investments and generating employment.
Meanwhile, significant underperformance of PSEs during the last decade have shrunk PSE share in India market cap.
There was a steady decline from about 31 percent in 2009 to the current about 8 percent levels.
Hence PSU stocks remain a major focus area for the government in the upcoming fiscal.
Privatisation is a powerful move that will help in augmenting the economic growth of the country as per analysts.
Also, increase in efficacy would further enhance employment generation thereby creating more work for everyone.
This will have a positive impact in fostering the national income of the country in the long-run.
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