Weighing its options to meet the disinvestment target of R40,000 crore, the finance ministry is looking at the QIP route. The process involving bidding by a group of large, informed investors enhances the chances of the assets receiving the best valuation. A disinvestment department official, on condition of anonymity, said the private placement or auction route can be considered as it will take less time and can potentially elicit a good response.
The QIP route takes less time as the modalities are less demanding than those for a full-scale public offer. The government is facing a challenge in meeting its fiscal deficit target of 4.6% this year. Fiscal deficit for the first five months reached 66.3% of the budgeted estimates for the full year 2011-12. The government has already borrowed R53,000 crore above the budget target from the market. With tepid growth in tax receipts in the first six months, keeping the disinvestment hope alive is also critical to the fiscal health of the economy.
Looking at the sluggish market, ministry is also considering other alternatives like asking cash-rich PSUs to buy back shares. ?Buyback is a good option when markets are down,? the disinvestment secretary Mohammad Haleem Khan said at the Economic Editors? conference. He, however, added that it was for the managements of cash-rich PSUs to take a call on this.
