The Union government’s plan to raise 56,500 crore through disinvestment in fiscal 2017 needs clarity as the Centre moves towards a new policy that includes monetizing assets such as land held by state-run companies.

Market experts say that the target may be achievable but sought clarity on how public sector enterprises will mobilize money through sale of assets and also the manner in which these proceeds will be transferred to the government. Such sales, in addition to a dilution in the government’s holding in public sector firms, is expected to net the government the budgeted divestment receipts.

Finance minister Arun Jaitley, in his budget speech, said the government has to leverage assets of CPSEs (central public sector enterprises) for generation of resources for investment in new projects. This, he said, would be part of the government’s new approach to divestment.

“We will encourage CPSEs to divest individual assets like land, manufacturing units, etc., to release their asset value for making investments in new projects," Jaitley said.

The government also renamed the Department of Disinvestment (DoD), which will now be called the Department of Investment and Public Asset Management (DIPAM).

Of the 56,500 crore target, the government plans to raise 36,000 crore through minority stake sale and 20,500 crore through strategic sales. This amount is 19% lower than the 69,500 crore budgeted for in fiscal 2016 at the time of the budget.

Dharmesh Mehta, managing director and chief executive of Axis Capital Ltd, said the disinvestment plan seems “realistic" but added that he needs to see the fine print of the new divestment policy.

Another top official with a large domestic investment bank, however, noted that the ability to hit that target depends entirely on market conditions.

“Past data suggests that disinvestments collection has trailed its target. Also these are broad policy guidelines and the government needs to clarify on the operational and execution of conducting disinvesments from the point of view of monetizing assets of PSUs," said the official on conditions of anonymity as his firm has been involved in the government’s disinvestment programme and he is not authorized to speak to reporters.

The government has now missed its divestment target 16 times in the 25-year history of disinvestment. In fiscal 2016, the government even failed to meet its revised target of 30,000 crore.

So far this fiscal, the government has managed to raise about 18,400 crore by selling stakes in Rural Electrification Corp. Ltd ( 1,608 crore), Power Finance Corp. Ltd ( 1,671 crore), Dredging Corp. of India Ltd ( 53.33 crore), Indian Oil Corp. Ltd ( 9,369 crore), Engineers India Ltd ( 643 crore), and NTPC Ltd (estimated 5,050 crore), data from the department of disinvestment’s (DoD) website shows.

The government has blamed the lower-than-expected collection on poor market conditions. Fears of a hard-landing of China’s economy, devaluation of the yuan and an increase in interest rates by the US Federal Reserve have muddied market sentiment. Since the start of this fiscal year, the benchmark BSE Sensex has fallen 17.7%, Bloomberg data shows.

“The government should revive loss-making PSUs and dispose of their holding at the earliest. Then it should focus on profit making PSUs which are not strategic in nature, offloading strategic stake in companies such as HZL (Hindustan Zinc Ltd), BALCO and SUUTI, as well as initiate listing of un-listed PSUs," said Prithvi Haldea, founder-chairman, Prime Database.

Deven Choksey, managing director of KR Choksey Securities Pvt. Ltd, said the intent of the government through disinvestment this year appears to be to monetize land assets of public sector units. This is a positive move, he added.

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