Proposed listing of the three railway PSUs gives a glimpse into government's plans for meeting its disinvestment target of Rs 72,500 crore -- its most ambitious to date.
The government is considering listing railway PSUs (public sector undertakings) in the next financial year 2017-18, Finance Minister Arun Jaitley said in his budget speech on Wednesday, giving a glimpse into the plans for meeting its disinvestment target of Rs 72,500 crore — its most ambitious to date.
The government is working on a revised mechanism to facilitate listing of central PSUs in a time-bound manner, Jaitley sais. “Listing of PSUs will increase accountability,” Jaitley said while presenting the Union Budget 2017.
Here are a few things you may like to know about the three railway PSUs to be put on block next fiscal year.
- Growing user base: IRCTC, the rail ticket booking and food and water catering company, is India’s most-visited website, Jaitley said in post-budget panel discussion. IRCTC is a profitable operation with growing cash flows as more and more Indians take to online booking and e-ticketing. Online booking of railway tickets is at about 60% of the total rail ticket bookings in India.
- Major revenue hit: However, Jaitly, in his budget proposals, has also abolished the service charge on tickets booked on IRCTC, cutting a major revenue stream for the company. IRCTC sold tickets worth Rs 24,022 crore in the last financial year 2015-16, earning a revenue of Rs 1,506 crore. Service charge accounted for over one-third of IRCTC’s total earning in the year at Rs 551 crore. This means that IRCTC will now have to depend a lot more on commission on tickets sold, sale of bottled water and food, and license fees from food vendors.
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- India’s Amazon: Earlier last month, Railway Minister Suresh Prabhu had said that IRCTC, which is already one of the largest e-portals in India, could become as huge as the e-commerce giant Amazon. He had added that the website would start online selling hand-made products procured from rural women.
- The other two: The other two railway PSU listing candidates are IRFC (Indian Railway Finance Corp) and Ircon International.
IRFC is the Ministry of Railways’ dedicated financing arm, which raises money from the market to help finance the railways plan outlay.
Ircon is an engineering and construction company, which specialises in transport infrastructure, offering construction work for airport terminal buildings, railway lines, roads and highways, bridges and flyovers, tunnels, station buildings, and signalling, among others.
- Indian government has undertaken strategic sale of stake in profitable PSUs to help boost state revenue and bridge the fiscal deficit, but has repeatedly fallen short of its disinvestment targets in the past. Its target of Rs 72,500 crore for the next fiscal is even more ambitious, which it will hope to meet with the proposed listing of these three PSUs, among others.
Indian government has a target to earn Rs 56,500 crore by divesting its stake in public sector undertakings in the current financial year 2016-17, and has already garnered about Rs 30,000 crore so far this fiscal through share sale and share buyback by the companies. It recently earned Rs 6,000 crore through issuing the secong tranche of its popular CPSE ETF, and another Rs 480 crore via a follow-on issue of shares in MOIL Ltd.