Budget 2018: The government is expecting to raise Rs 1 lakh crore through disinvestment in 2017-18, higher than the budgeted estimate of Rs 72,500 crore. For the next financial year, the government has pegged the divestment target at Rs 80,000 crore, finance minister Arun Jaitley said in his Budget speech. “I am happy to inform the House that we have already exceeded the Budget estimates. I am assuming receipts of Rs 1,00,000 crore in 2017-18. I am setting the disinvestment target of Rs 80,000 crore for 2018-19,” Jaitley said. This is substantially higher than Rs 46,247 crore received by the government in 2016-17. The surplus in this year’s divestment is primarily due to the sale of the government’s 51.11% stake in HPCL to ONGC for Rs 36,915 crore. Jaitley said the government has approved listing of 14 central public sector enterprises (CPSEs), including two insurance companies. The government, he said, has also initiated the process of strategic disinvestment in 24 CPSEs, including the strategic privatisation of Air India. Strategic divestment could be a key revenue mobiliser in the coming fiscal as concluding such deals should be easier. Other notable divestments this year include the sale of strategic holding in SUUTI for Rs 4,154 crore and initial public offerings of New India Assurance and General Insurance Company for Rs 17,357 crore.
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According to Dharmakirti Joshi, chief economist of Crisil, the divestment target is achievable but requires extraordinary efforts and front-loading. “It has to start from day one and not wait for the last quarter because this is an aggressive target over an already aggressive target achieved by the government,” Joshi said. Joy Rankothge, vice-president of credit strategy at Moody’s Investors Service, said, “Moving forward, increased divestments could contribute to higher government revenues, greater efficiencies within state-owned enterprises and help reduce the government’s high debt burden. The divestment target points to likely further consolidation of state owned oil & gas companies.”