New Delhi: The finance ministry on Tuesday said that the disinvestment programme will kick off with the dilution of government equity in listed entities, where public holding is less.
In an interview, finance secretary Ashok Chawla also ruled out using the proceeds of disinvestment to finance fiscal deficit, even as it is expected to widen to about 18-year high of 6.8% of GDP this fiscal.
“Basically, we will first go with the companies which are listed and where stocks in public float is much less — 2%, 5% etc. There is scope for that to increase,” Chawla said.
There are at least 12 listed public sector units where public shareholding is less than 10%. They include companies like NMDC, MMTC, Neyveli Lignite, Hindustan Copper.
However, Chawla did not name the companies where disinvestment process could start.
“Now we have had some views, preliminary identification of where it (disinvestment) will be possible, we had some discussions with ministries. It is at that stage,” he said.
When asked about the amount government aims to raise from disinvestment, Chawla said, numbers cannot be fixed as yet since these are only preliminary discussions.
“Now what will finally be agreed to? What will the Cabinet approve? What percentage? When it will happen? What will be the market price? That will determine the amount which is a function of number of shares and market price. So, there cannot be a maximum target per se,“ Chawla said.
Chawla indicated that the advise given by the economic survey about raising Rs25,000 crore from disinvestment every year might not happen this fiscal.
“What the economic survey says you should look at Rs25,000 crore a year, but that may or may not happen every year. In the current year already four months or so have gone. There is time process, through which these companies have to go, so therefore for the current year it is very difficult to say what the amount will be,” the finance secretary said.
He also said the proceeds from disinvestment will not be used to fund widening fiscal deficit. “The amount will not be used to finance fiscal deficit, it would be used for high priority social sector programmes,” he said.
There were speculations that the government may use part of the proceeds to finance fiscal deficit, but currently the proceeds go to the National Investment Fund (NIF), norms of which do not allow this.
When asked whether NIF norms will be changed, Chawla said, “That I can’t say. The Cabinet will decide that. But, either way whether it is spent through NIF or otherwise, it will be spent on flagship social sector programmes,” he said.