The Centre’s disinvestment proceeds this fiscal are poised to comfortably exceed Rs 1 lakh crore, more than double the level achieved last year. It has almost netted Rs 92,500 crore, with the sale of its entire stake in Hindustan Petroleum Corporation to Oil & Natural Gas Corporation to soon fetch a handsome Rs 36,915 crore. Offers for sales in five PSUs including Indian Oil Corporation, NHPC and SAIL are likely to materialise before the end of this fiscal year, potentially generating another Rs 17,600 crore. Ten proposed initial public offerings (IPOs) including of Hindustan Aeronautics, IRCON International and RITES as well as strategic sales of nearly a half a dozen other PSUs are also in the the pipeline, with aggregate revenue potential of Rs 10,000 crore or thereabouts, although only some of these transactions are expected to conclude by March 31. If all the above deals are completed in the current year, the disinvestment revenue could even be upwards of Rs 1.2 lakh crore. The higher-than-budgeted receipts from sale of government stakes in PSUs and private firms — the FY18 Budget estimate for disinvestment is Rs 72,500 crore — was despite the modest headway achieved in “strategic sales”, the euphemism for privatisation.
With private investments still in the doldrums, the Centre has little room to cut capex this year. In this context, higher disinvestment revenues would help it avoid a fiscal slippage of more than 10-20 basis points from the Budget target of 3.2% of GDP in 2017-18.
What added to the disinvestment momentum early on in the current fiscal were a clutch of IPOs and a new exchange-traded fund (ETF) that saw strong investor response, including from the retail segment. Nine PSUs including Oil India, HAL and Engineers India have exercised the option to buy back shares worth Rs 4,191 crore from the government this year. A few other firms are being nudged to exercise the buyback option though it is unclear how many of them will do so before the close of 2017-18. As per the capital management rules of the Centre, over a dozen PSUs including BHEL, Airports Authority of India and SJVN qualify for share buybacks.