A push towards divestment

Even before the election code of conduct sets in next month, the BJP-led NDA government’s disinvestment programme is set to get into top gear with a slew of market offers of bluechip public sector companies including Power Finance Corporation’s (PFC) proposed takeover of entire government equity in REC.

Presenting the interim budget in Parliament, finance minister Piyush Goyal said the government received over Rs 1 lakh crore as disinvestment proceeds during 2017-18. “We are confident of crossing the target of Rs 80,000 crore this year,” Goyal said. Accordingly, for FY20, the disinvestment target has been kept higher at Rs 90,000 crore.

Though the minister did not specify how FY19 disinvestment target would be achieved given that till January 29, the government has realised a mere Rs 35,532.66 crore as disinvestment proceeds, sources said that PFC-REC deal itself could provide close to Rs 14,000 crore.

Another Rs 15,000 crore is proposed from third round of fund offer by Bharat 22 ETF while blue chip companies such as Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC) may pitch in with share buybacks to complete the disinvestment target of Rs 80,000 crore for current fiscal.

Given the market conditions, government could also go in for sale of up to 10 per cent stake in few blue chip companies and IPOs of few rail PSUs. 

Earlier there was a plan to do so in over a half a dozen companies including HUDCO, NTPC, NBCC, MMTC, Hindustan Copper, NMDC and Bharat Electronics (BEL). A Debt Exchange Traded Fund (ETF) is also proposed to be launched soon. Having lost out valuable time since the start of FY 19 when a limited number of share sale offers hit the market, government now wants to pack the time between now and March end to give a leg up to its disinvestment programme.