Budget 2022-23: The Central Government may announce a roadmap for the merger of six Public Sector Undertakings (PSUs) under the Ministry of Railways in the Union Budget 2022-23. In this way, the government can step in the direction of comprehensive restructuring of these organizations.
Principal Economic Adviser Sanjeev Sanyal had recommended the merger in a report released in August 2021 on the rationalization of government entities under the Ministry of Railways.
There may be a proposal for merger in the budget
Top government officials told Moneycontrol that Finance Minister Nirmala Sitharaman, while presenting the Budget 2022-23 on February 1, told Rail Vikas Nigam Ltd. (RVNL) with Indian Railway Construction Ltd. (IRCON), RailTel Corporation along with Indian Railway Catering and Tourism Corporation (IRCTC) and Braithwaite & Company Ltd. With Rail India Technical and Economic Services (RITES) may announce to move forward towards merger.
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Railway Board has suggested timeline
The Railway Board has suggested a timeline for the merger of six PSUs, the official said. “Two of the three PSU mergers are expected to be completed next year, but their timeline will depend on regulatory approvals,” he said.
The merger of IRCON with RVNL and IRCTC with RailTel is likely to be completed in 2022-23. The Ministry of Railways expects the merger to increase valuations of PSUs, which can be useful in raising funds on good terms.
RVNL implements projects related to construction and augmentation of rail infrastructure; IRCON is a specialized infrastructure construction organization.
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Proposed merger expected to maintain monopoly
RITES is a consultancy, which exports Rolling Stock and manufactures Braithwaite Rolling Stock. The proposed merger has the potential to create a monopoly, thereby increasing the valuation in the event of sale of parts or the entire product.
The process of merger of railway PSUs was initiated in September, when the finance ministry asked the Indian Railways to submit a plan for merger of seven public sector companies on the proposal of the Principal Economic Adviser.