Govt may mop up over Rs 20000cr from divestment in FY10

By Aabhas Pandya, edited by Vandana Hingorani/NewsWire 18

The government is likely to comfortably raise over Rs 200 billion (Rs 20,000 crore) via stake sale in state-owned public sector companies in the current financial year ending March, a senior finance ministry official said. "A number of divestment candidates have been lined up, and we hope to easily raise over Rs 200 billion via divestment in the current year," the official told NewsWire18. "We expect the Cabinet to approve more PSUs for stake sale in the next one month. These include NMDC Ltd, Steel Authority of India Ltd , and Rural Electrification Corp Ltd ," the official said.

Last week, the government also approved stake sale in NTPC Ltd and Satluj Jal Vidyut Nigam. The government has already raised Rs 42 billion (Rs 4,200 crore)  in the current year via stake sale in initial public offers of NHPC Ltd and Oil India Ltd. The Budget for 2009-10 had set the divestment target at a modest Rs 11.2 billion (Rs 1,120 crore). "We decided to go with a very small target because it was difficult then to know how the markets will behave or investors' appetite for PSU stocks. We are taking divestment on a case to case basis and it (the process) has been largely smooth so far," the official said. The proceeds from divestment are currently parked in National Investment Fund and the government cannot directly use that money for bridging its fiscal deficit. Three fund managers-SBI MF, LIC MF, and UTI manage the NIF and the government can only use the returns generated from the corpus to fund social sector schemes and strengthen weak PSUs. The government is currently in the process of tweaking the rules governing NIF to utilise funds directly for meeting expenditure on social sector schemes.
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