Govt’s Rs 50,000 cr divestment plan to not have any impact on PSUs: Madhusudan Kela

While presenting her sixth budget, Finance Minister Nirmala Sitharaman said that the government aims to raise Rs 50,000 crore from stake sales in various public sector companies in fiscal 2024-25. For the current fiscal year, the Union Budget has scaled down the divestment revenue target in the revised estimates to Rs 30,000 crore from Rs 51,000 crore.

IDBI Bank and CONCOR were the two prime divestment targets for FY24. However, several roadblocks came in the way and they were put on hold. With FY25 divestment estimates higher than Street expectations, the market is now hopeful that these will be completed in the next fiscal.

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Meanwhile, the government is targeting a fiscal deficit of 5.1 percent of the GDP for 2024-25. The fiscal deficit target for next year is a huge 70 basis points lower than the current year's revised estimate of 5.8 percent.

“The government’s intent to curtail fiscal deficit this year and also give a two-year guidance that it will be 4.5 percent is very heartening from not just the market but the country's perspective,” Kela added.

Kela believes that the move is positive for the market as it will lead to a reasonable amount of borrowing and liquidity being left for banks and private sector companies to look for their capital requirements.

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Comparing the PSUs with corporates, Kela said that in the last three years, the government has underpromised and overperformed. He added that the stability of taxes is another point in favour as for the last two years, there has been only positive tinkering.

Nirmala Sitharaman presented the interim budget ahead of the general elections due by May 2024. In her shortest speech so far, which wrapped up in 58 minutes, Sitharaman highlighted India's booming economy and hiked the FY25 capital expenditure outlay by 11.1 percent to Rs 11.11 lakh crore, at 3.4 percent of GDP.

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