The government is confident that the privatisation of Bharat Petroleum and the initial public offering (IPO) of Life Insurance Corporation of India will be completed in the January-March quarter of the current fiscal year (2021-22), Chief Economic Advisor Krishnamurthy Subramanian said.
In an interview to Moneycontrol, Subramanian said that the Air India privatisation was in an advanced stage, with two bidders having come in, and it will be completed soon.
“When you look at divestment this year, there are three key items -- Air India, Bharat Petroleum and LIC’s IPO. For Air India, two bidders have come in and both of them are serious bidders. So I feel like things are getting aligned and that deal should happen soon,” he said.
“The BPCL privatisation and LIC IPO should happen in the fourth quarter, because there's a lot of work that has already happened. So when you look at the divestment target, the Rs 1.75 lakh crore that we have budgeted, we should be able to meet that target,” Subramanian said.
The CEA said that the government has not factored in any proceeds that may come from asset monetisation. “While that money will go to the PSUs, the government will get part of it through dividends,” he said.
The 2021-22 Union Budget has set a divestment target of Rs 1.75 lakh crore, most of which is expected to come from privatisation and the LIC IPO. The privatisation plans have long been pending, and it includes giving up all or most government stake and management control in Air India, Bharat Petroleum, Container Corp, Shipping Corp, Pawan Hans and others.
Finance Minister Nirmala Sitharaman had also announced that two state-owned banks and a general insurance company will be privatised this year. However, as Moneycontrol had reported earlier, given that the long, and hitherto untried process of privatising state-owned financial companies has just begun, the Centre will look to meet the target by pushing forward with existing plans like Air India and BPCL.
The Department of Investment and Public Asset Management has already shortlisted the legal advisors for the LIC IPO, which is expected to be the largest market debut for any Indian company.
Government officials estimate that the divestment of Air India and BPCL, and the IPO of LIC should be enough to meet this year’s divestment target.