Government May Pare Stake in 38 White Elephants to Garner Rs 60,000 cr

NEW DELHI: The government is expected to set a roadmap for disinvestment of public sector enterprise (PSEs) in the forthcoming Budget slated to be tabled in Parliament on July 10. It is expected to set a disinvestment target of `60,000 crore for 2014-15 that it is likely to meet through disinvestment of as many as 38 PSEs.

The disinvestment target has now been raised, the earlier the government had set a disinvestment target of around `38,000 crore in its interim Budget presented this year.

However, under the previous regime government’s disinvestment targets were never met and the UPA government chose to blame the slow down as well as poor market conditions for the failure of not being able to meet its target.

According to the written reply in Parliament, the Minister of State for Finance had told the House that in 2010-11 and 2011-12 fiscals, the government had raised `22,144 crore and `13,894 crore through disinvestment, against the budgeted target of `40,000 crore in each year. In 2012-13 fiscal, the government had raised `23,956 crore, against the target of `30,000 crore.    

The need for disinvestment is being felt even more this year as India’s fiscal deficit - the measure of the extent to which a government is spending beyond its means, has already hit 45.6% of the budget or `5.3 trillion, which is a six year high.

Finance Minister, Arun Jaitley after taking charge in May had said that his main objective was to pay “a lot of unpaid bills” in a clear reference to country’s huge fiscal deficit which stood at 4.47 per cent of the gross domestic product and the legacy that he had inherited from the past regime.

In its bid to meet disinvestment target and also generate revenue to address the fiscal deficit, the Securities and Exchange Board of India recently approved a host of new norms including pruning government holding in PSUs from 90 per cent at present to 75 per cent.

Experts say that with the government eventually bringing down its holding in PSEs would alone help it garner as much as `58,000 crore.

There are as many as 38 PSEs where government’s shareholding is less than 25 per cent. Of these, Coal India’s off loading of as much as 25 per cent share would mean  one PSE alone - Coal India Ltd (CIL) - would have to sell shares worth nearly `37,000 crore, sources said.

Apart from CIL, government is expected to start its disinvestment calendar by disinvesting PSU behemoths like SAIL and Hindustan Zinc but it’s waiting for better market valuations.