Govt Misses Divestment Target

Ahead of the Budget, the government has achieved almost half the divestment target of Rs 65,000 crore.
FY23 divestment receipts are unlikely to be anywhere close to the budgeted target.

The government may add small- and mid-cap central public sector enterprises (CPSEs) to its list of divestment and privatisation candidates for the next financial year.

However, the priority will be speeding up ongoing big-ticket deals, including the stake sale of IDBI Bank and Container Corporation of India (Concor), a senior government official told Business Standard.

“Identifying sectors and companies is an ongoing process of the divestment department. So we might draw a fresh list that could have small-, mid-cap CPSEs,” the official said.

About 40 CPSEs are currently categorised as mid- and small-cap CPSEs.

Meanwhile, the stake sale in IDBI Bank, Concor, Shipping Corporation, BEML and NMDC Steel among others is currently ongoing.

While IDBI has received preliminary bids for the proposed stake sale, the Department of Investment and Public Asset Management (Dipam) is working on Concor’s Expression of Interest, which is likely to be out by the month-end.

The official said they were awaiting demerger notice on Shipping Corp from the ministry of corporate affairs.

Government officials hinted that efforts were being taken to conclude stake sale of Shipping Corp and BEML by March.

Meanwhile, the privatisation of two public sector banks would take longer, and may not be part of the privatisation plan for the financial year ending March 31, 2024 (FY24), another official added.

Dipam was going slow on the PSB privatisation keeping in mind the volatile markets, the official added.

In the 2021 Budget speech, Finance Minister Nirmala Sitharaman had announced the privatisation of a couple of State-run lenders and a general insurance company.

Ahead of the forthcoming Budget, the government has achieved almost half the divestment target of Rs 65,000 crore (Rs 650 billion) for the current fiscal year.

FY23 divestment receipts are unlikely to be anywhere close to the budgeted target.

To date, Dipam has raised over Rs 67,000 crore(Rs 670 billion), with Rs 31,106 crore (Rs 311,06 billion) as divestment receipts and over Rs 36,000 crore (Rs 360 billion) as dividend.

“The divestment department is hopeful of having a lower divestment target for FY24, less than what is budgeted for this fiscal year,” one of the officials cited above said.

The government may set the FY24 divestment target below Rs 60,000 crore (Rs 600 billion) for FY24, according to sources.

It is learnt that Dipam had proposed to North Block to make dividends a part of the overall budgeted target for disinvestment.

Currently, PSU dividends received by the Centre do not count as disinvestment proceeds.

“Disvestment should be looked at from the prism of reviving loss-making companies instead of setting some goals. Dividends from CPSEs (which is non-tax revenue) and divestment (which is miscellaneous capital receipts) are the two responsibilities of Dipam,” an official said.

“Both should be looked at, as far as resources to the government are concerned.”

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