The volatile markets along with wary foreign institutional investors seems to have put the brakes on the government’s stake sale programme for now. This may well result in lower-than-budgeted revenue from disinvestment proceeds in 2013-14.
“As of now, the market conditions are such that they do not augur well for any disinvestment. While we are working on stake sales in a number of public sector units, nothing is planned for the immediate future. We will wait for the market to stabilise,” said a senior government official, adding that the offer-for-sale route will be used for most stake sales, which does not require much preparatory time.
The government had targeted to mop up Rs 40,000 crore from disinvestment proceeds in 2013-14 but officials now concede that this may be too ambitious.
“As of now, we only have two large issues — CIL (Coal India) and Indian Oil, which will help raise about Rs 14,000 crore,” said the official, adding that it could prove difficult to have too many stake sales due to the turbulent market.
So far this fiscal, the government but has raised just about Rs 1,000 crore from stake sales in public sector firms, including MMTC and Hindustan Copper.
While the rupee has slipped by 25 per cent since April this year, the stock markets too have shed heavily with the Bombay Stock Exchange bellwether index Sensex shedding over 2,000 points between May and August this year and dipping below 18,000 level. Investments by foreign institutional investors too has been on the decline this fiscal.
Meanwhile, the fear of attack on Syria by the US keeps investors in wait-and-watch mood, overshadowing the prospects of a quick recovery in the market.
Reflecting this sombre mood, the finance ministry on Thursday appointed seven merchant banks to manage the 5 per cent disinvestment in Coal India Ltd but said there was no timeline for the deal.
“It could happen around October, which is good time as it comes right in the festive season. But a decision has yet to be taken,” said an official.
So far this fiscal, the government but has