Finance minister Arun Jaitley is likely to retain the FY15 disinvestment target of Rs 52,000 crore set by his predecessor P Chidambaram. The interim Budget in February had set a target of Rs 36,925 crore from stake sale in government PSUs and a minimum of Rs 15,000 crore from the Centre's residual stake sale in Hindustan Zinc and Balco.
Sources said the action plan of the disinvestment department of the finance ministry, which includes plans for seven to nine PSUs, has been approved, without any change in the overall proceeds target, sources said.
As per the action plan, the PSU disinvestment for FY15 would include three initial public offerings, in total expected to garner about Rs 6,000 crore to the exchequer. As reported by FE, these are of Hindustan Aeronautics, Rashtriya Ispat Nigam and THDC India. The Centre plans to divest 10% in each of these firms to start with. The target also includes a provision of earning Rs 1,500 crore from sale of some sick PSUs.
Officials told FE that some other PSUs that may see a reduction in the government stake this fiscal include Container Corp (current government stake 61.08%), National Hydroelectric Power Corp (85.96%) and Bharat Electronics (75.02%), among others.
In FY14, the budgeted disinvestment target of Rs 40,000 crore (excluding HZL-Balco) was drastically cut down to around R16,000 crore for a number of reasons, which showed a glaring lack of planning on part of the centre. Officials hope such a situation can be avoided this fiscal as the Centre has options of strategic sale, that is, either the Centre can sell a majority stake in a company, or exit it.
“Approving a major strategic sale will take time as such cases may require parliamentary nod. But if the Centre is given the go-ahead, the target can be easily exceeded,” a finance ministry official said. Another measure which may increase the actual proceeds from disinvestment is the government's proposed move to reduce stake in public-sector banks to between 51-58%.
“The Budget is expected to follow the path of fiscal consolidation. What we will have to watch out for is how subsidies can be reduced and the savings diverted to capital spending,” said DK Joshi, chief economist with Crisil. “Given that we have consistently failed to meet the disinvestment targets, if this time it can be met or exceeded, it will be an achievement,” he added.