Thanks to sale of Centre’s bonus debentures in NTPC, its disinvestment receipts in FY16 exceeded revised Budget estimate (RE) by Rs 6,849 crore, sources said. It collected Rs 32,149 crore as against the revised target of Rs 25,300 crore.
Higher tax collections than the revised estimate (up Rs 5,000 crore), last-minute pick-up in disinvestment revenue and marginal reduction in Plan expenditure from the RE level helped the government contain the fiscal deficit within the budgeted level of 3.9% of GDP, sources said.
Towards the end of March, the government sold its debentures worth Rs 8,152 crore in NTPC to the Employees’ Provident Fund Organisation (EPFO), one official said. Besides the NTPC debentures, the government also raised about Rs 4,500 crore by selling a portion of its holding in unlisted Hindustan Aeronautics (HAL) and Bharat Dynamics (BDL) back to these companies. These transactions took the disinvestment revenue from R19,514 crore (raised through small stake sales in seven PSUs) to Rs 32,149 crore just before the fiscal year concluded on March 31. Separately, the buyback of shares in HAL and BDL also fetched the exchequer Rs 1,023 crore in transaction taxes.
The buyback by HAL fetched government Rs 4,284 crore while it raised Rs 199 crore from BDL. HAL had a cash reserve of R16,300 crore while Bharat Dynamics had Rs 1,100 crore at end-March 2015.
To bridge the shortfall in disinvestment revenue, cash-rich PSUs with high net worth and low leverage ratios were prodded to make use of surplus funds through buyback. Post buyback, the the price-to-earnings (PE) ratios of these companies would significantly improve, which could attract investors when the government finally divests shares in these companies, they said. Currently, there are about 169 unlisted central PSUs.
The Centre, which is actively monitoring the surplus deployment by PSUs, had advised undertake capital expenditure or pay higher dividends to help it tide over a shortage of revenues. The government had retained its spending commitments even after the disinvestment target was slashed to Rs 25,300 crore over the budget estimate of Rs 69,500 crore (including strategic stake sale) for the current fiscal.