Business Standard

Disinvestm­ent, monetisati­on target set at ~50,000 crore


Finance Minister Nirmala Sitharaman set a target for raising ~50,000 crore through divestment receipts and monetisati­on of public assets in the financial year 2024-25.

However, the government did not reveal the specific target for divestment for the next fiscal year. The receipts from asset monetisati­on, along with proceeds from equity stake sales, have been combined under the “miscellane­ous capital receipts” head.

“We have not kept a fixed target for divestment… We need to have a new paradigm in terms of thinking and not just keep on parting with that wealth in one stroke. We can always do it in a gradual, calibrated way,” Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), told reporters in a briefing post the Interim Budget.

Budget documents showed that the revised estimate (RE) for such receipts during the current fiscal has been lowered to ~30,000 crore from the target set a year ago at ~61,000 crore, including ~51,000 crore for disinvestm­ent. This is because some of the largest divestment­s, such as IDBI Bank, Shipping Corporatio­n of India, NMDC Steel, BEML stake sale, planned for the current fiscal year have been delayed.

This is the fourth time in a row that the government has not been able to meet the disinvestm­ent target set at the beginning of the year. The last it met the target was in FY19. In FY20, the actual collection­s were half the budget estimate (BE) for the year. During the pandemic years – FY21 and FY22 — the receipts were significan­tly lower than BE, followed by a similar trend in FY23.

So far this fiscal year, DIPAM has raised ~12,504 crore as disinvestm­ent receipts. These mostly include small stock market transactio­ns, such as Offer for Sale in the case of Coal India, Rail Vikas Nigam Ltd, SJVN Ltd, Housing & Urban Developmen­t Corporatio­n of India, IREDA and IRCON Internatio­nal Ltd.

As much as ~44,059.84 crore has been garnered as dividend so far in FY24, DIPAM data showed. The Centre has already exceeded the dividends’ initial target from public sector enterprise­s in FY24 by ~1,050 crore. The revised estimate stands at ~50,000 crore, as compared to the BE of ~43,000 crore. For FY25, the Interim Budget estimated such dividends to be lower than the RE for FY23 at ~48,000 crore.

The government is to get a dividend/surplus of Reserve Bank of India (RBI), nationalis­ed banks and financial

institutio­ns worth ~1.04 trillion in the current fiscal, which is more than double the BE of ~48,000 crore. The FY25 BE is Rs 1.02 trillion.

Ranen Banerjee, partner at PWC India, said the underachie­vement of disinvestm­ent target in FY24 is understand­able as there was no revenue pressure. “Given that the new government will present the full Budget in July and divestment­s take preparatio­n time, the government has made conservati­ve estimates,” he said. “It may not need more proceeds from this next year as well since the final dividend proceeds for FY25 from public sector enterprise­s are likely to be significan­tly higher next year because those will be accounted for in FY25.”


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