Centre to set divestment target over Rs 1 lakh crore again, may float ETF for public sector banks

we will basically be repeating much of this year’s divestment plans including that of strategic divestment next financial.
Finance Minister Nirmala Sitharaman. (File photo| PTI)
Finance Minister Nirmala Sitharaman. (File photo| PTI)

NEW DELHI: The central government is likely to aim for a disinvestment target of around Rs 1 lakh crore in the financial year 2020-21, despite having managed to garner just Rs 18,095 crore from disinvestment so far in the current fiscal, out of a target of Rs 1.05 lakh crore.

A top government official said that "with most of the bigticket disinvestments such as BPCL, MMTC, NMDC and BHEL that would fetch us large receipts pushed to next year, we will basically be repeating much of this year’s divestment plans including that of strategic divestment next financial."

The government wanted to go ahead with strategic disinvestment of firms such as Bharat Petroleum Corporation Ltd (BPCL), Bharat Earthmovers Ltd (BEML) and Nilachal Ispat Nigam Ltd (NNIL), besides Air India for which an Expression of Interest was floated on Monday. However, officials said that the calendar for strategic sales had to be postponed. “Most of the strategic sales were pushed back as the bourses were choppy,” officials said.

They said that the government would also try to raise money through two other ways: first by monetising assets and secondly, by coming up with a special Equity- Traded Fund (ETF) for public sector banks and insurance firms.

The Centre has already shortlisted consultancy firms for the sale of PSUs’ non-core assets, including land buildings, brownfield operational assets such as pipelines, roads, mobile towers and electricity transmission lines.

The firms include RITES, Boston Consultancy Group, Pricewaterhouse Coopers, Deloitte and KPMG. Officials say their remit will be to identify and sell off all non-core assets that can be monetised. “Much of that work is already on and is nearing completion,” they said.

The government has already launched CPSU ETF and Bharat 22 ETF, both of which were considered to be great successes. It has some 11 listed banks and several insurance firms. Officials said the best performers among them would be bundled up for the financial sector ETF. "The plan for the financial sector ETF has been in the offing for some time. We can go ahead with now as many of the banks have been recapitalised and are doing financially very well," said an official.

Best of State-run banks, insurance companies to be divested

To raise capital, the government is likely to roll out a special Equity- Traded Fund (ETF). The Centre has some 11 listed banks and several insurance firms, and according to officials, the best performers among
them would be bundled up for the financial sector ETF.

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