Budget 2017: Govt seeks to raise Rs 72,500 cr via divestment, up 60% YoY

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26 Aug, 2025 12:21

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Sidhartha ShuklaMoneycontrolThe government hopes to raise Rs 72,500 crore in FY18 by divesting stakes in public sector firms. Compared to the revised estimate of Rs 45,500 crore for FY17, this is an increase of around 60 percent.This financial year the government plans to achieve the target amount of Rs 72,500 crore by raising Rs 46,500 crore via minority stake sale, Rs 15,000 crore through strategic stake sale and Rs 11,000 from the listing of various insurance companies.

For FY17, the government had envisaged raising Rs 36,000 crore from minority stake sales and Rs 20,500 crore from strategic stake sale -- a total of Rs 56,500 crore.In his Budget speech, Jaitley said,"Our ETF (exchange-traded fund), comprising shares of ten CPSEs, has received overwhelming response in the recent Further Fund Offering (FFO). We will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18."

As per dipam.gov.in, till date, the government has received Rs 27917.32 crore from selling its minority stake in various public sector undertaking (PSU) companies and Rs 3,096.35 crore by divestment of SUUTI holdings in L&T.Unlikely to achieve the estimate target for FY17, GoI has revised its minority stake sale target to Rs 40,000 crore and strategic divestment to Rs 5,500 crore.

India has met its disinvestment target only three times in the past 15 years. Both UPA II and NDA governments have fallen short of their annual divestment target.Over the years, the failure to achieve the targets have often ascribed to factors such as volatile market conditions or issue prices being too high.

In order to achieve the divestment target for 2016-17, the government had eased rules for merchant bankers managing stake sale of Axis Bank, ITC and L&T by allowing them to enter into a competing transaction with a private company provided they notify SUUTI as and when they enter into any conflict of interest situation.

Earlier, merchant bankers were not permitted to enter into any competing transaction for entire three years for which they are being hired and hence, the bankers had approached DIPAM for a change in the clause.

Despite the relaxation, the government did not seem too keen on shedding the stake it holds in various companies through the SUUTI fund and sold only 1.6 percent of its share in L&T.

Currently, through SUUTI the government holds 12.02 percent stake in Axis Bank, 11.10 percent in ITC and 6.69 percent in L&T. If the government sells its complete stake in these three companies, it can raise around Rs 57,000 crore.

Read more: LIVE UNION BUDGET 2017-18 UPDATES Follow: Moneycontrol Budget Page

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