After its mega disinvestment plan appears to have come a cropper in fiscal year 2015-16, the government is expected to set out a more realistic target of Rs 40,000 crore in fiscal year 2017, sources have told CNBC-TV18.
The plan, sources said, will focus on front-loading stake sales in FY17 and a Cabinet nod to 29 companies is already in place.
Further, the government is set to provide greater clarity on strategic sales, something that was confirmed by Divestment Secretary Neeraj Gupta in an interview with CNBC-TV18 -- after it has all but missed its target this year.
During the Union Budget last year, the government had set a stiff Rs 69,500 divestment target for FY16 (Rs 41,000 crore through stake sales in public sector companies and Rs 28,500 crore through strategic sales -- or sale of stake in private companies or outright privatization).
But so far the government has missed both targets by a significant margin.
In the interview, Gupta shed more light on the government's divestment program going forward.
Below is the verbatim transcript of Neeraj Gupta's interview with Shereen Bhan on CNBC-TV18.
Q: I could start by asking you about the Engineers India (EIL) offer for sale (OFS) and this relatively small OFS, in that sense it is good news for the government that it has gone through successfully but what more can we expect now as far as the disinvestment calendar for this financial year is concerned?
A: I agree that Engineers India was a small OFS but the response to the OFS is big. I like to underline that the retail investor has reaffirmed the confidence in PSU equity and government backed equity in the current volatile market.
If you see the numbers, the retail has bid for 31 percent of the total bidding size, if you add mutual funds and high net worth individuals (HNIs), it will be around 51 percent of the total bids which we have received.
You are aware that retail quota has been oversubscribed by 3.92 times but that is the heartening part of this whole issue. However, as far as government is concerned, we are committed to the policy of disinvestment and we continue to pursue it rationally.
Q: You already have several clearances in the pipeline; you have got the cabinet nod to take a lot of these issues through the market. What can we expect in this particular financial year, we have got about a month left to the Budget? Are we likely to see you move aggressively and get some of the big ticket one done? Is Coal India a possibility in this financial year?
A: Let's not stick to the numbers or stick to the specific issues. EIL has come out because we were ready to bring it out and in a market situation which suggested that we can bring it out. Government policy is clear and when you talk about targets, they are mere expression of government policies for affirmative action by us and our best endeavour should be put in place.
I will not put it into compartment of dates. The policy of disinvestment is a policy which will run in continuum without dates and timelines and the market condition provides you the right environment for disinvestment.
Q: You are saying that the market condition today provide you the right environment or do not provide you the right environment to push big ticket issues like Coal India?
A: I will not be able to spell it out here because they are very dynamic. They change every minute, every hour but definitely we will look for opportunities and rationally divest.
Q: Let me ask you in a different way - is it likely that you are going to come even close to the budgetary estimates as far as disinvestment target is concerned?
A: I will not attempt to answer this question at this point of time because my expressions affect the market sentiment.
Q: But as far as strategic sales are concerned because this has been something that this government has been talking about. We understand now that policy has been firmed up as far as strategic sales are concerned. Could you shed some light on that?
A: Honourable Prime Minister has expressed clearly where the government should be in business and not in business. The finance minister clarified in the last Budget speech which included a strategic and minority stake sale. Definitely we are going ahead for a policy prescription for strategic sale and that is definitely on the agenda of the government.
Q: Can we see more clarity on the strategic sale policy in the Budget or is it likely to be even ahead of the Budget?
A: It is a decision of the government when to announce but we are definitely moving ahead and we are trying to firm up the policy on strategic disinvestment.
Q: Could we see any strategic sale go through in this financial year?
A: I may not be able to predict just now but there are many tracks which are already open. We are working aggressively in hotel segment on working out some of the Indian Tourism Development Corporation (ITDC) hotels which is under tourism ministry and the initiative is been driven by them. We are definitely supporting and joining with them.
Q: Since you talked about ITDC, there has been back and forth on what the government's approach will be with regards to ITDC properties. The tourism ministry thinks that the management contracts is the way forward, the finance ministry seems to believe that an outright sale should be the way forward. When you say there is movement on the ITDC properties. What should we expect that to mean?
A: I think you have to wait for that and secretary tourism will be the right person to answer to your question but the best effort is to manage these assets. The best effort is to manage investment in the best efficient and possible manner.
So government is looking as an investor in this project and various options are available to see--divestment is one of the options of management of the investment of the government.
Q: Would it be fair to assume because given the track record as far as this particular department is concerned on the disinvestment front where we have fallen short of every budget estimate on the disinvestment front. Is it now fair to assume that we are going to see a much more realistic target in FY17?
A: I think you are trying to bring it to the numbers which I would like to not comment upon, but targets are indicative and they are not the limits and they are set to set a tone for the best effort and I am sure we will try to attempt whatever given to us.
Q: Let me end by asking you one more time that are we likely to see in this financial year ahead of April 1, the government try and push through several other issues like EIL at least the smaller issues?
A: I am sure we should be always optimistic. Let the market provide me an environment. I will definitely take it to the government and take a decision on it.