Centre sets Rs. 50,000 cr disinvestment target for FY25, fails to meet FY24 projection

India’s track record in meeting the budgeted disinvestment target has been dismal. The Center has missed its divestment target for the fifth year in a row.

The government aims to raise Rs 50,000 crore from stake sales in various public sector companies in 2024-25, according to the budget documents released on February 1.

For the current fiscal year 2023-24, the Union Budget has scaled down the disinvestment revenue target in the revised estimates to Rs 30,000 crore from Rs 51,000 crore. A significant portion of the projected revenue was missed because no strategic sale transaction came through due to complications and issues with state governments in each case.

India’s track record in meeting the budgeted disinvestment target has been dismal. The Center has missed its divestment target for the fifth year in a row.

The finance ministry’s Department of Investment and Public Asset Management (DIPAM) will be aiming to complete the strategic sale of the Shipping Corporation of India (SCI) and IDBI Bank in FY25. The IDBI Bank privatisation is likely to fetch Rs 15,000-16,000 crore to the government, while the SCI strategic sale is expected to drive in Rs 3,000 crore.

The revenue receipts from disinvestments are a part of the Center’s non-tax revenue, which help the government narrow its budget gap. With the impending general elections, disinvestment is likely to move forward in the slow lane for a few months.

DIPAM has relied solely on OFS and IPO instruments for the current fiscal. No major buybacks have happened this year as it exempted eligible PSUs from capital restructuring norms so that their cash reserves could be used for expansion.

Strategic sales of Bharat Earth Movers Limited (BEML) and Container Corporation of India Limited (CONCOR) are also delayed. As many as 14 strategic sales are underway with the likes of smaller PSUs like PDIL and HLL Lifecare pending. Projects & Development India Limited's (PDIL) strategic sale may not happen as it has been put on the back burner.

After the new PSE policy was announced in 2021, no new company has been suggested under it to be privatised, closed, consolidated or subsidiariesed. According to the policy, all public sector enterprises will be privatised, except the four strategic sectors of atomic energy, space and defence, transport and telecommunications, power, petroleum, coal and other minerals, and banking, insurance and financial services.