route, institutions can put in their bids
over the floor price fixed by the government.
However, the Finance Ministry is now working on more innovative methods, like floating PSU Exchange Traded Fund (ETF) to carry forward the disinvestment drive and has floated a Cabinet note in this regard.
The auction route or offer for sale route (OFS) as allowed by market regulator Sebi saw some technical glitches initially which brought about some confusion regarding the ONGC share sale subscription.
While the government was optimistic about the success of the auction route, the first issue of 2012, ONGC, bombed on the stock exchanges amidst high drama, with the 98 per cent of the issue getting subscribed finally. Of this, Life Insurance Corporation (LIC) bid for the 84 per cent of the issue.
The Parliamentary Standing Committee of Finance, headed by senior BJP leader Yashwant Sinha, criticised the disinvestment programme saying that the government was using state-owned companies as "milching cows" to bridge deficit.
It said divestment was nothing but mere "financial engineering" and that the government tried to "shift money from one pocket to the other".
The state-run LIC and financial institutions had to come in for the rescue at the last moment, which helped the high profile issues of ONGC and Hindustan Copper (HCL) to barely scrape through.
In the 2012-13 Budget, the government had planned to raise Rs 30,000 crore through disinvestment in PSU. This was lower than Rs 40,000 crore envisaged in 2011-12.
While the government had managed to raise about Rs 14,000 crore in 2011-12 fiscal, so far in the current fiscal it has managed to raise over Rs 6,900 crore.
Paving the way for further stake sale, the government has already identified a host of companies for disinvestment, including Hindustan Aeronautics and Rashtriya Chemical.
With only about three months left for the current financial year, the government will have to work overtime to achieve the Rs 30,000 crore disinvestment target.