The centre has projected a conservative disinvestment target of Rs 1.75 lakh crore for FY22 even though bulk of the deals planned in FY21, including the big-ticket strategic sale of fuel retailer-cum-refiner BPCL and the mega initial public offer of Life Insurance Corporation are seen materialising next fiscal.
Strategic disinvestment of Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans and Neelachal Ispat Nigam are also expected to be completed in FY22. Additionally, privatisation of two public sector banks and one general insurance company to be taken up in FY22, the government said without naming them.
With Covid-19 pandemic playing spoilsport, FY21 disinvestment revenues (revised estimate) will be at a five-year low of around Rs 32,000 crore or 15% of the massive annual target of Rs 2.1 lakh crore.
Unveiling the much awaited strategic disinvestment policy, finance minister Nirmala Sitharaman said four broad sectors are classified as strategic in which at least one PSU is to be retained while the remaining ones can be privatised or merged or closed. These sectors are: atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; banking, insurance and financial services. In non-strategic sector, CPSEs will be privatised or closed.
The new policy will release a large number of PSUs for privatisation in the coming years, potentially boosting the Centre’s non-debt capital receipts for various social sector and developmental programmes.
As FE had reported earlier, the Niti Aayog has asked the government to retain control over the country’s top four state-run lenders — State Bank of India, Punjab National Bank, Bank of Baroda and Canara Bank, even as it recommended that three small public-sector banks — Punjab & Sind Bank, Bank of Maharashtra and Uco Bank — be privatised on a priority basis.
Sitharaman also announced that an incentive package is being worked out for states to incentivise disinvestment of their PSUs.
She also proposed to use a Special Purpose Vehicle in the form of a company to carry out monetisation of idle land with central government departments and PSUs, either by way of direct sale or concession or by similar means.
The government’s plan to sell 52.98% stake in BPCL, which was worth about Rs 60,000 crore in November 2019, around the time the stake sale proposal, was approved by the Union Cabinet. At the current market prices, the stake is worth about Rs 45,150 crore only. However, the actual receipts will depend on valuation and consideration of a premium.
The IPO of LIC was the second biggest component of the budgeted disinvestment target for this fiscal.
While the valuation of the insurer – which often plays White Knight to the government – will be known closer to the listing, it is believed to be worth Rs 8-11.5 lakh crore, meaning a 10% IPO could fetch the government Rs 80,000-110,000 crore.
After EoI stage, Air India privatisation will enter financial bids stage in March-April and the officials are optimistic of the deal going through in FY22. The bids for AI are likely to be under Rs 20,000 crore. The Centre could get about Rs 3,000 crore cash.