Disinvestment fails to take off this fiscal year; govt manages only 10% of target

The government failed to lift its disinvestment plans off the ground this financial year with sale receipts adding up to only Rs 21,302 crore against the ambitious target of Rs 2.1 lakh crore. With this, the government looks set to record the lowest amount raised in the last seven financial years. Marred by a pandemic, this fiscal the government has fallen significantly short of its target, managing to raise merely 10% of the desired amount, according to data published by the Department of Investment and Public Asset Management (DIPAM). The target for the current fiscal year was three times higher than the Rs 67,000 crore target that was set in the previous year.

What the government sold

So far, the government has raised Rs 4,924 crore by trimming its stake in Hindustan Aeronautics (HAL) through an OFS — its largest receipt of this fiscal year. 20% stake dilution in IRCTC through an OFS has further helped the government collect Rs 4,473 crore. Meanwhile, a 10% stake cut in Steel Authority of India (SAIL) resulted in the government shoring up its kitty by another Rs 2,737 crore. Ircon International and Bharat Dynamics were the other two OFS reported by the government this financial year.

Riding the wave, similar to a large number of India Inc promoters, the government of India also took to Dalal Street to raise funds through IPOs. So far, three state-owned companies have managed to raise Rs 2,773 crore for the government. The largest of these was the recent IPO of Indian Railway Finance Corporation Ltd. This year’s disinvestment target included Rs 1.20 lakh crore from selling a stake in CPSEs and Rs 90,000 crore from stake sale in financial institutions.

The sale of key assets such as Air India, BPCL, and Life Insurance Corporation of India (LIC) did not fructify for the government this fiscal year. Hence, all of these have now been moved to the next financial year for disinvestment. With only Rs 21,302 crore raised so far by DIPAM, the government looks set to have raised the least amount since the divestment of Rs 15,818 crore worth assets in the financial year 2013-14.

Disinvestment plans shifted ahead

Heading into the next financial year, the central government looks poised to ramp up the disinvestment process. For the Financial year 2022, Finance Minister Nirmala Sithraman has announced a disinvestment target of Rs 1.75 lakh crore. This is to be raised from the stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company.

Prime Minister Narendra Modi too has been vocal about the government disinvestment targets. “The government is moving ahead with a resolution to monetise and modernise. When the government monetises, space is filled by the private sector. The private sector brings with itself global best practices, (which leads to) modernisation and aids the relevant sector to expand at a faster pace and create more jobs,” the Prime Minister said last month. PM Modi asked investors to take advantage of the National Asset Monetisation Pipeline (NAMP) of 100 assets announced in the Union Budget.