FM may raise divestment goal to ₹1.5 lakh cr for FY21
Divestments likely in next fiscal include AI, BPCL, Concor, SCI
NEWDELHI: Finance minister Nirmala Sitharaman is likely to set an even more ambitious disinvestment target of ₹1.5 lakh crore for the year starting April 1, mostly because many of the strategic sales planned for the current year, including that of Air India, have been delayed.
The strategic disinvestments that are now expected to be completed in the next fiscal include Air India, Bharat Petroleum Corp. Ltd (BPCL), Container Corporation of India Ltd (Concor) and Shipping Corporation of India Ltd (SCI).
“We expect around ₹1 lakh crore from the privatisation of BPCL, Air India, Concor, SCI and the rest from buybacks and follow-on public offers in some CPSES (central public sector enterprises),” a finance ministry official said on condition of anonymity.
“While the process of strategic disinvestment of the four CPSES will begin in the current fiscal year, the proceeds will accrue only in the next fiscal year.”
The stiffer target for 2020-21 comes after government officials acknowledged, as Mint reported on December 26, that the disinvestment target of ₹1.05 lakh crore for 2019-20 will fall short by around ₹50,000 crore due to delays.
As on January 9, the government has garnered ₹18,095 crore through stake sales in 2019-20. To be sure, the government has been able to meet its disinvestment target only twice in the last eight years.
While the government plans to privatise Air India by selling its 100% ownership in the airline, it will divest its entire 53.29% stake in BPCL and 30.8% stake in Concor out of its current 54.8% stake and 63.75% stake in SCI.
The cabinet has also decided to consolidate CPSES in the power sector by approving the sale of its entire stake in Tehri Hydro Development Corp. (74.23% stake) and North Eastern Electric Power Corp. Ltd (100% stake) to NTPC Ltd.
The Cabinet Committee on Economic Affairs on November 20 approved a proposal to reduce the government’s stake in select CPSES to under 51% on a case-to-case basis. However, due to limited headroom in many CPSES and huge overseas
A STIFFER TARGET IS LIKELY BECAUSE MANY OF THE STRATEGIC SALES PLANNED FOR THE CURRENT YEAR HAVE BEEN DELAYED
borrowings by CPSES such as NTPC and Power Finance Corp. Ltd, the government is finding it difficult to bring down its stake in listed CPSES, Mint reported on December 30.
If the government completes the strategic stake sale in BPCL, Concor and SCI, that would lay the foundation for a much more ambitious programme of disinvestment of CPSES, sending a positive and clear message to market participants, former finance secretary Subhash Chandra Garg wrote on his blog. “If this larger and more ambitious programme of strategic disinvestment can be announced, company by company, in the Budget 2020-21, it would send very clear and positive message and team DIPAM (department of investment and public asset management) would also have time to plan and execute the transactions during the whole of 2020-21,” he wrote.
At the end of March 31, 2018, there were 339 central public sector enterprises with a total paid-up capital of ₹2.5 lakh crore and reserves and surpluses of ₹9.42 lakh crore.