The Department of Investment and Public Asset Management or DIPAM secretary Tuhin Kanta Pandey termed the FY24 budgeted estimate for disinvestment receipts as “realistic” and said it was based on practical considerations as divestment was dependent on many factors, including market conditions, status of transactions and global economic outlook.
“This (₹51,000 crore) is a realistic target given to us and we should be able to meet it, as there are many rolling transactions,” Pandey said in an interview to ET.
He added that the divestment of BEML Ltd, IDBI Bank and NMDC Steel Ltd. (NSL) will be closed in the next financial year.
The budget has pegged disinvestment receipts at ₹51,000 crore for next financial year, marginally higher from the current fiscal’s downwardly revised Rs 50,000 crore.
Pandey brushed aside the criticism that the government had shifted the focus away from the divestment with the budget speech omitting any mention of stake sales or privatisation. He said this was a business as usual approach with regard to disinvestment and pointed out that several line items in the budget were not mentioned in the budget speech.
The FY2023-24 budget presented on Wednesday is prime minister Narendra Modi-led NDA government’s last full budget before the general elections.”It is not something where a new thing has been announced, but based on practical considerations, keeping in view the market considerations , status of the transactions and the reducing bandwidth as you cannot have divestment on the same scale all the time,” Pandey said, adding that the government is now focused on calibrated disinvestment.
He said the budget had also provided clarity on carry forward of losses for state-owned entities and their subsidiaries under the income tax.
The government has so far raised ₹31,106 crore from the divestment in the current financial year and out of which ₹21,000 crore came from Life Insurance Corporation initial public offering.
The government is expecting to meet the revised target for FY23 from minority stake sale and mainly offer for sale (OFS) of part of its residual stake in Hindustan Zinc Ltd by next month.
“The exact proceeds will also depend on the timing and size of the offer, which will depend on the market conditions,” Pandey said, declining to name the entity that would be taken up.
Pandey said the government cannot divest companies at any valuation. “These numbers were decided 14 months in advance… The government is not looking at divesting a company at any cost,” he said, adding that one needs to take into account dividend receipts that come from state-owned entities.
He added that the performance of CPSE indices have been very good in recent years and have outperformed both the Nifty and Sensex. The center has so far received Rs 36,957 crore from the dividends of CPSEs.
On delay in demerger of Shipping Corporation of India, he added that the demerger process is expected to be clear very soon.
He said the department was working closely with the Railway Ministry on disinvestment of Container Corporation of India Ltd and the transaction is expected to be closed by the next financial year.