PSU Ownership Models: Committee Highlights Key Recommendations

Parliamentary Panel Pushes ‘Golden Share’ Model to Retain Strategic Control in PSUs​

Committee Recommends Legal Framework as Government Considers Stake Reduction Below 51 Percent​

New Delhi, March 17: A parliamentary panel on Tuesday urged the Department of Investment and Public Asset Management (DIPAM) to establish a clear legal strategy to safeguard strategic control in public sector undertakings (PSUs), even if government shareholding falls below 51 percent.

The panel proposed exploring mechanisms such as a “golden share” or indirect control model, which would allow the government to retain decisive influence in key PSUs while reducing its equity stake. At present, maintaining PSU status requires the government to hold at least 51 percent ownership.

Focus on Governance, Capital Allocation, and Institutional Strengthening​

In its report, the Standing Committee on Finance emphasized the need to evolve the existing Memorandum of Understanding (MoU) framework into a performance-driven system. It recommended incorporating structured succession planning and cautioned against excessive dividend extraction, noting that it could impact the internal accruals required for CPSEs to meet their annual capital expenditure target of Rs 3 lakh crore.

To address administrative gaps, the panel, chaired by Bhartruhari Mahtab, called for urgent filling of 38 vacant officer positions through coordination with the Department of Personnel and Training and the Department of Expenditure.

Roadmap for InvITs, REITs and Revenue Stability Measures​

The committee also asked DIPAM to design a calibrated roadmap for rolling out Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs), backed by strong valuation safeguards and transparent oversight.

In its 33rd report on Demands for Grants for 2026-27, the panel highlighted the importance of bridging revenue gaps at the Revised Estimates stage. It noted that timely allocation adjustments are essential to maintain administrative efficiency, uninterrupted services, and institutional stability.

Debt Management, MSME Support, and PPP Reforms in Focus​

The Department of Economic Affairs (DEA) was advised to work closely with the Reserve Bank of India to optimize the borrowing calendar and explore debt reduction strategies aimed at lowering the interest burden over the medium term.

The panel also recommended refining the debt management strategy by shifting towards longer maturity borrowing profiles to reduce refinancing risks and free up resources for capital investment.

Additionally, it called for the immediate finalization of the SME Growth Fund structure to accelerate funding for the MSME sector and meet urgent financing needs.

Strategic Shift in Infrastructure Funding and Investor Confidence Measures​

The report emphasized the need to reorient Viability Gap Funding (VGF) toward new-age and social infrastructure, ensuring funds are directed to sustainable and high-impact projects rather than being purely demand-driven.

To improve investor confidence, the panel recommended strengthening the public-private partnership (PPP) ecosystem by leveraging GIFT IFSC as a global capital hub and operationalizing the International Dispute Resolution Centre to ensure legal clarity.

Expanding PFMS and Strengthening Outcome-Based Budgeting​

For the Department of Expenditure, the committee stressed expanding the Public Financial Management System (PFMS) to the last mile, integrating it fully with state treasuries to eliminate delays in fund utilization reporting.

It also called for strengthening outcome-based budgeting practices and enhancing the capabilities of internal audit systems across ministries, ensuring that public spending translates into measurable developmental outcomes.