Finance Minister Nirmala Sitharaman enhanced the revenue target for disinvestment of central public sector enterprises (CPSEs) to Rs 105,000 crore in her maiden budget from Rs 80,000 crore proposed by in Piyush Goyal in February. Officials now suggest that the government is likely to go for a disinvestment overdrive this year, and the seemingly high disinvestment target could be 'very achievable'.
"So far we have a total of 59 CPSEs listed. There are 10 more which can be listed this year," Atanu Chakraborty, secretary, Department of Investment and Public Asset Management, said on the sidelines of a CII event. "It would also depend on the market environment and other factors, which we think will remain conducive," Chakraborty told THE WEEK.
The budget foresees a lower current account deficit (difference between net imports and exports) and a lower fiscal deficit (government's surplus expense over incomes) on the back of lower oil price globally. Last year, with oil prices touching $128 per barrel, India, a major importer of mineral oil, witnessed a widening of the current account deficit due to excess outflow of foreign currency amounting to Rs 40,000 crore.
Chakraborty also hinted that minority stake disinvestment in many of these PSUs would be fast-tracked, even for in public sector banks. Owing to high volumes of recapitalisation of PSU banks, the government owns more than 76 per cent stake in some lenders. In the budget, Sitharaman had said the government will divest stake to encourage more private participation and for capital raising.
"Raising capital is the objective behind these divestments. But the norm is we tend to think that something is not a PSU if the government share is not to the extent of 51 per cent," said Chakraborty.
He said that with the budget allowing for tax exemptions for investments made in CPSE exchange-traded funds (ETFs) under Section-80C of the Income Tax Act, ETFs are gaining more popularity. "We would prefer this route for most of our minority stake disinvestment," he added.
On the strategic disinvestments of large PSUs, Chakraborty said that as evinced by the finance minister in her budget speech, Air India sale is still very much on the cards. He said a second request for proposal is being readied and that Air India could be on the blocks again later this year.
Large outlays by the government on social sector schemes like PM Kisan, Ujjwala and Nal se Jal or Har Ghar Jal scheme for piped water announced in the Union budget this year, have renewed focus on the disinvestment programme of the government.
Addressing a gathering of industrialists at the CII event, Chakraborty urged corporates to look for growth in not only smaller CPSEs, but also the smaller rural-urban market. "The government is looking to enhance consumption in these areas. That is where you need to go for growth," the secretary advised.