Divestment estimates for FY25 at 8-year low of Rs 50,000 crore

Budget 2024

Expectations from miscellaneous capital receipts at Rs 50,000 crore budgeted for FY24-25 is roughly about 18 percent lower than FY24’s Rs 61,000 crore. This is lowest targeted by the central government since FY17. To be sure, miscellaneous capital receipts, which can colloquially be called divestment receipts, include proceeds from disinvestment in public-sector undertakings.

However, when seen against the actual receipts from divestment in FY23 at Rs 46,034.89 crore, FY25’s budgeted estimates for the current fiscal seems a tad high.

To be sure, divestment of IDBI Bank (first proposed in FY21) is ongoing and a few more names such as Mazagon Dock Shipbuilders, Concor, IRFC Ltd, Shipping Corporation of India, NFL Limited and Rashtriya Chemicals & Fertilizers are also seen as divestment candidates.

Trading at a market capitalization of over Rs 92,000 crore, the government seems to be estimating 33 percent of the divestment target to be met by IDBI Bank stake sale. Going by news reports, the major hurdle of obtaining a clearance from the RBI on names of interested investors seems to have been crossed. The Union Government currently holding about 45 percent stake in the bank, has offered 30 percent of its stake for divestment, which would fetch about Rs 16,730 crore.

Interestingly, this was the first full budget speech where the finance minister made no mention about divestment while delivering the budget.

“There wasn’t much expectation built on divestment in any case given how the past three years have been a damp squib on this front,” said a banking sector expert who didn’t want to be names. In fact, experts point out that given the significant dip in revised budgeted estimates from miscellaneous capital receipts at Rs 30,000, it would be interesting to see if the much toned-down expectations for FY25 can be met.

To put things in perspective, Budget 2021 saw the highest estimates from divestments at Rs 2.1 lakh crore, but actuals fell short of the number by a huge margin. The government has had its best run with divestments in 2017-18 when it earned Rs 1,00,045 crore from stakes sale in public sector enterprises.