Budget 2021: Modi government eyes Rs 1.75 lakh crore from disinvestment

NEW DELHI: Keeping up with her promise of focusing on divestment, Finance Minister Nirmala Sitharaman has set an ambitious target of disinvestment receipts at Rs 1.75 lakh crore for the next fiscal year.

“In spite of the pandemic, we kept working towards strategic sale of BPCL, IDBI Bank, Air India, which will be completed in 2021-22,” Sitharaman said in her post-Budget media interaction.

The government has already invited the Expression of Interest for Air India, BPCL and Shipping Corporation of India, while it hopes to complete disinvestment of IDBI Bank, Neelanchal Ispat Nigam etc in 2021-22,  apart from the mega IPO of the Life Insurance Corporation.

For the next financial year, up for sale are two public sector banks and a general insurance company.

The NITI Aayog has already been tasked with preparing next list of sick PSUs and CPSUs for strategic disinvestment.

The divestment proceeds become an important part of its non-tax revenue at a time when the government is going with higher spending, revenue collection remains muted and the Centre stares at fiscal deficit of 6.8%.

Some experts, including Moody’s Investors Service, has already raised doubts over the government achieving the targets. 

“The fiscal deficit target of 6.8 per cent for 2021-22 tries to strike a balance between supporting growth and a modest deficit reduction, but improvements in tax compliance and monetisation targets may be difficult to achieve,” the rating agency said in a note.

Despite so much push on divestment, so far they had been garnering an average of Rs 0.56 lakh-crore since 2014. In the current fiscal, total proceeds of disinvestment and share buyback till date are at a five-year low of Rs 0.19 lakh crore.

Going by the past performance, the task is going to be challenging for the government, if not impossible.