Funds already raised, ONGC-HPCL deal proceeds add up to Rs 84,000 cr; a clutch of more stake dilutions, IPOs and strategic sales likely
If the transactions already initiated and the plans laid out materialise — in all probability, most would — the Centre’s disinvestment revenue may cross the Rs 1 lakh crore mark this year, against the Budget target of Rs 72,500 crore. This would be a major feat for the government, given that year after year disinvestment targets have been missed miserably. Revenue from sale of government stake in companies in the current year will be in excess of Rs 84,500 crore if the current mop-up is added to the government’s estimated proceeds of over Rs 32,000 crore from the proposed sale of the government’s entire equity stake in oil refiner/marketer HPCL to state-run explorer ONGC. The ONGC-HPCL deal appears set to be concluded before the end of the current financial year. “Every deal (approved by the government) is on track,” the department of investment and public asset management (DIPAM) secretary Neeraj Kumar Gupta said, when asked whether the deal would be completed by March 2018.
The Centre’s non-tax receipts were weak in the first half of FY18 due to a Rs 27,341-crore shortfall in Reserve Bank of India (RBI) dividend this year, even as concerns remain on the tax revenue front as well due to the goods and services tax’s transitional problems and the likelihood of a slower-than-estimated growth in direct tax revenue, which grew 15.2% till October this fiscal against 17.5% in the April-August period.
Higher PSU dividends (about Rs 17,000 crore more than Rs 67,529 crore budgeted) and extra disinvestment receipts could make up a large part of about Rs 50,000 crore shortfall in receipts due to RBI cutting dividend, lower telecom spectrum proceeds and excise duty cut on petrol and diesel. So far this year, DIPAM has garnered about Rs 52,500 crore in disinvestment receipts, including Rs 14,500 crore via Bharat 22 ETF which concluded on Friday, Rs 9,704 crore from the GIC Re IPO, Rs 9,118 crore from NTPC offer for sale, Rs 7,653 crore from New India Assurance IPO and Rs 4,153 crore from strategic sales from its SUUTI holdings. Against the initial disinvestment target of Rs 56,500 crore and revised target of Rs 45,500 crore, the government had collected Rs 46,247 crore in FY17.
Disinvestment proceeds this year could be higher if other plans too pan out. Plans for offers for sale in seven PSUs including Indian Oil Corporation, NHPC and Oil India have the potential to generate around Rs 21,000 crore. Besides, as many as 10 IPOs and strategic sales of nearly a dozen PSUs are on the pipeline — these transactions could fetch another Rs 10,000 crore. However, all these deals might not go through this year. It is not clear whether Air India sale will go through in the current year. Separately, Oil India, Engineers India and Bharat Dynamics have exercised the option to buy back shares worth Rs 2,243 crore from the government. More firms are likely to follow this route soon.
With economy slowing down and private investments in the doldrums, the Centre has little room to cut spending. While central PSUs will give a helping hand, budget spending also needs to be sustained, even though initial few months’ staggering pace could be calibrated in the following months of the year. Scope for larger-than-budgeted disinvestment proceeds is vital in this context.