Vijay Kelkar gave an insightful speech titled ‘On strategies for disinvestment and privatisation’ on 29 Jan 2010. The crux of the speech is reallocation of public sector assets portfolio.
Some facts about public sector assets:
Over the years, the size of the public sector has increased and currently, there are 473 central PSUs including banks and insurance companies. Out of these, 104 are listed and 369 unlisted; while at the State level there are 1160 State PSUs. It is estimated by informed financial analysts that the valuation of the central PSUs on P/E basis for the listed companies and P/B basis for the unlisted companies is now placed at $ 450-$500 billion dollars or 40-45% of country’s GDP.
However, according to the latest CMIE data, the net profits of the Central PSUs works out to be only2.2% of their total assets. It is true that this ratio is higher for the oil companies such as ONGC and Oil India, but in general, the net return on the capital employed in PSUs seems to be lower than for the India’s private corporate sector. If one includes the State level PSUs, then the private corporate sector would show significantly higher returns on the capital employed.
He then points to the need to rethink on the role of public sector.
Mostly Economics 
