Budget 2021: FY21 disinvestment target at Rs 2,14,000 cr; only Rs 6,500 cr achieved so far

Indian Union Budget 2021-22: India had set a humongous disinvestment target for the current fiscal year 2020-21 – its most ambitious so far. However, with nearly three quarters of the year already gone, the nation has achieved only 3 percent of the sales target. Prime Minister Narendra Modi’s government had set a target of raising Rs 2.14 lakh crore via disinvestment in the current financial year – three times bigger than the Rs 67,000 crore in the previous year. However, it has generated a receipt of Rs 6,533.11 crore so far in the current fiscal year, according to government data. The government has so far disinvested equity stakes in Hindustan Aeronautics; Bharat Dynamics; Mazagon Dock Shipbuilders; RITES; and SUUTI, as seen in the information available with the Department of Investment and Public Asset Management (DIPAM).

Earlier, in July, Finance Minister Nirmala Sitharaman had said that the government was working on completing the stake sale process of about 23 PSUs, whose divestment was approved by the Union Cabinet. Hindustan Prefab; Engineering Projects (India); Scooters India; Bharat Pumps and Compressors; Cement Corporation of India; Hindustan Fluorocarbon; Bharat Earth Movers; Pawan Hans; and Air India and its five subsidiaries and one JV; are some of the PSUs included in the list of 23 PSUs chosen for disinvestment.

While announcing the Modi government’s flagship Atmanirbhar Bharat package, FM Sitharaman had also announced the opening up of all sectors for private sector participation. In these strategic sectors, the PSU firms are to be limited to a maximum of four units. The government had said that the move would lead to consolidation of PSUs as well as scaling up of their operations.

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The government wants to sell a stake in PSUs at a time when it fetches the right price. While Rs 1.20 lakh crore out of the disinvestment target of Rs 2.14 lakh crore will come from disinvestment of PSUs, another Rs 90,000 crore is likely to be generated from stake sale in financial institutions. It is to be noted that besides the above disinvestment, the government has also disinvested $1.1 billion from FDI by India in the first half of the current fiscal, according to RBI.

Meanwhile, the government plans to sell about 15-20 percent stake in Indian Railway Catering and Tourism Corp (IRCTC) via offer for sale (OFS) and would like to complete the transaction in a minimum number of tranches. Apart from IRCTC, the disinvestment process of BPCL, along with Air India is making headlines. Tata Group has submitted an expression of interest (EoI) for the debt-laden national airline Air India over the weekend, which may bring the bidder back in the cockpit after its 1953 exit.