Unlocking value

Arun Jaitley’s Union Budget 2017 has set an ambitious disinvestment target of raising Rs72,500 crore but, as history shows, that goal isn’t likely to be achieved


Finance minister Arun Jaitley presented the Union Budget 2017 in Parliament on Wednesday. Photo: PTI
Finance minister Arun Jaitley presented the Union Budget 2017 in Parliament on Wednesday. Photo: PTI

One of the highlights of Union Budget 2017 was the renewed focus on management of public sector enterprises and the disinvestment programme. The government has set an ambitious target of raising Rs72,500 crore through this route. Going by history, commentators are sceptical that the target will be achieved. Given the advantages of disinvestment, it is surprising that the movement on this front has been so slow over the years.

Often, adverse market conditions are cited as a big reason for not achieving the target. Like everyone else, the government should also not try to time the market. In fact, significant progress on this front can itself be a big sentiment boost for the market. Also, as public issues have shown in the past, the market always has appetite for good quality paper at reasonable valuation.

What has been lacking is political will. The problem was aptly noted by the Economic Survey: “Defying history, there is still the commitment to make the perennially unprofitable public sector airline (Air India) ‘world class’.”

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