Disinvestment decisions will not be driven by short-term fiscal priorities: Finance Secretary

Finance Secretary TV Somanathan

In a bid to de-emphasise disinvestment as a source of fiscal resources, the central government has deliberately avoided keeping a specific target in the interim Budget for 2024-25, Finance Secretary TV Somanathan told Moneycontrol in an interview on February 2.

This reflects a change in the government's thinking wherein decisions on disinvestments will not to be taken by short-term fiscal priorities, but will be taken based on maximising the value of investments, the finance secretary said.

"There is no disinvestment target. This is a conscious change where we now look at disinvestment as one element in a strategy for managing the government’s assets," Somanathan added.

As per the Budget documents, the government has estimated it will get Rs 50,000 crore in 2024-25 in the form of 'Miscellaneous Capital Receipts', without mentioning the word disinvestment. However, the 2023-24 Budget – under the same 'Miscellaneous Capital Receipts' head totalling Rs 61,000 crore – had pegged the disinvestment target for 2023-24 at Rs 51,000 crore.

In the 2024-25 budget, the overall 'Miscellaneous Capital Receipts' head for the current financial year has been revised down to Rs 30,000 crore. So far in 2023-24, the government has only managed to raise Rs 12,504 crore through disinvestment.

The finance secretary further said, there is a change in how the government view's the link between fiscal management and public asset management. "We used to rely on public asset management as a source of financing our budget. We are now looking at it differently. We are deemphasising disinvestment as a source of fiscal resources," he added.

However, the central government's overall policy on privatisation remains important and should continue, Somanathan added.

Not too long ago, the Centre had unveiled a new PSU policy, which focusses on privatising public-sector entities in non-strategic sectors, while specifying certain strategic sectors in which the presence of these enterprises would be mandatory for public interest.

Watch the full interview on moneycontrol. Coming soon.