Govt revises disinvestment estimate by 55.4% to ₹78k cr

NEW DELHI: The government has revised its disinvestment estimate for the current financial year to ₹78,000 crore , down from ₹1.75 lakh crore envisaged in the budget estimate (BE) on February 1 last year, which is a 55.4% reduction, and has set a target of ₹65,000 crore for 2022-23, according to Union Budget documents.

Speaking to reporters after presenting the budget, finance minister Nirmala Sitharaman said that the government would continue the policy related to public sector enterprises as envisaged in the previous budget on February 1, 2021.

Union Budget 2021-22, presented on February 1 last year laid a clear roadmap for disinvestment in all nonstrategic and strategic sectors. “We have kept four areas that are strategic where bare minimum CPSEs [central public sector enterprises] will be maintained and rest privatised,” she said in her previous budget speech.

An official aware of the development said the revised estimate (RE) of the current financial year has been reduced as the government does not want to mention the valuation of initial public offering (IPO) of Life Insurance Corporation (LIC) at this stage, which is not prudent. “LIC IPO is big and it is scheduled in the current financial year,” the person added.

“Towards implementation of the new Public Sector Enterprise policy, the strategic transfer of ownership of Air India has been completed. The strategic partner for NINL (Neelanchal Ispat Nigam Limited) has been selected. The public issue of LIC is expected shortly. Others too are in the process for 2022-23,” Sitharaman said in her budget speech on Tuesday.

The budget estimate (BE) for disinvestment in 2022-23 has been trimmed by 16.6% compared to ₹78,000 crore in the RE of current financial year. So far, the total disinvestment government proceed is ₹12,029.9 crore, which includes ₹2,700 crore receipt from Air India privatisation and balance ₹9,330 crore through sale of minority stakes in CPSEs.

In the current financial year, major disinvestments planned include IPO of LIC, Bharat Petroleum

Corporation Ltd (BPCL), RINL and Pawan Hans. According to experts, a 10% IPO of LIC shares may raise over ₹1 lakh crore. While briefing reporters after the Budget, Sitharaman said, “The final valuation of LIC is still being worked out.”

Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said, “If we keep too high a target, sometimes it also distorts the market.”

Experts said disinvestment targets were ambitious in past. Indeed, the government has rarely met them. As against the budgeted disinvestment target of ₹2.10 lakh crore in 2020-21, the government raised ₹37,897 crore and in 2019-20, disinvestment receipts stood at ₹50,298 crore, lower than the RE of ₹65,000 crore and BE of ₹1.05 lakh crore.

Experts said the reduction in RE estimate is prudent. Divakar Vijayasarathy, founder & managing partner at consultancy firm DVS Advisors LLP said: “Interestingly in the budget speech there has not been any Big Bang announcement about disinvestment; rather the government has chosen to focus the pending ones such as LIC.”