Gaurav ChoudhuryMoneycontrol
Finance Minister Arun Jaitley may set a 'disinvestment' target of about Rs 60,000 crore that it expects to earn by selling equity in state-owned companies in Budget 2017-18, closer to the current year’s original goal of Rs 56,500 crore.
Earning extra revenues through state-controlled companies’ dividends and selling equity in such companies is critical for next year’s central Budget math.
For the seventh consecutive year and 17th time since 1991 when the disinvestment programme was launched, the government is likely to miss its budgetary target of raising money by selling stake in public sector undertakings (PSUs).
In February, 2016, a new policy for management of government investment in central public sector enterprises (CPSEs), including disinvestment and strategic sale was approved.
This was to leverage the assets of CPSEs for generation of resources for investment in new projects. The policy allows CPSEs to divest individual assets like land, manufacturing units etc. to release their asset value for making investment in new project.
The Department of Disinvestment (DoD) has been renamed as Department of Investment and Public Asset Management (DIPAM) with enhanced mandate of efficient management of government investment in CPSEs by addressing issues such as capital restructuring, dividend and bonus shares.
The approach is towards capital management from investor’s point of view.
During the current financial year, the government has government has so far realized about Rs 30,000 crore of disinvestment revenues.
These include disinvestment by offer for sale in 13 CPSEs such as National Hydroelectric Power Corporation (NHPC) (Rs. 2716.55 crore) and Hindustan Copper Limited (HCL) (Rs. 399.93 crore), Employees-OFS in Indian Oil Corporation limited (IOCL) and National Thermal Power Corporation (NTPC) for Rs. 262.49 crore and Rs. 203.78 crore respectively, and three buyback of shares by National Aluminum Company Limited (NALCO) (Rs. 2831.71 crore), MOIL Limited (Rs. 793.87 crore) and National Mineral Development Corporation (NMDC) (Rs. 7519.15 crore).
OFS to employees of Engineers India Limited (EIL) has yielded Rs. 31.37 crore, and buyback in Coal India Limited (CIL) and Bharat Electronic Limited (BEL) has yielded at least 4536 crore.
The government has also carried out disinvestment through the exchange traded fund (ETF) route that allows simultaneous sale of government stake in various CPSEs through a single offering and avoids the necessity to go to the market repeatedly for divesting different stocks.
The CPSE-ETF provides a mechanism for the government to monetize its shareholding in those CPSEs that eventually form part of the CPSE ETF basket, in a stock-neutral, time-efficient and non-disruptive manner.
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