Home / Budget 2019 / Budget Expectations /  Budget estimates from disinvestment likely to be 1 trillion

NEW DELHI : The next fiscal sell-off target is being pegged at over 1 trillion on the back of higher number of strategic stake sale of both big and small companies, apart from the scheduled divestment of Air India, BPCL and Concor and launch of a financial ETF to monetise government stakes in banks and financial and public insurance companies.

The Financial ETF is an old programme and in fact, DIPAM has already sought advisors for it. The Government plans to expand the ETF portfolio by including stocks of PSBs, public sector insurance firms and public sector financial institutions.

In 2019, the government launched bond ETF — Bharat Bond. There are two exchange-traded funds — CPSE ETF and Bharat-22 ETF — listed on domestic exchanges. The two state-owned insurance companies — General Insurance Corp of India and New India Assurance Co Ltd — and 19 public sector banks (soon to be 10) are listed on exchanges, as well as IFCI.

The Union Budget is likely to keep the disinvestment estimates at almost the same level as in the current fiscal, people in the know of the matter said.

The current fiscal target is 1.05 trillion which was upgraded from 90,000 crore initially estimated.

The pending disinvestments of BPCL and Air India apart, sources said a number of strategic sales will be lined up in the fiscal where the government will take up "big and small" strategic sales of PSUs while also bringing down stakes in many other PSUs to below 51%.

These include the BEML, where the government is likely to sell 28% stake through strategic disinvestment from its current 54% and retail 26% stake, Projects India and Pawan Hans. BEML, a mining equipment maker, has diversified into manufacturing of rail coaches and defence production.

The disinvestment department is learnt to have drawn up a list of relatively better performing CPSEs including bluechips like Nalco, NMDC, NTPC, and Coal India to go for offer for sale (OFS). National Aluminium Co Ltd, Coal India Ltd, NTPC Ltd, NMDC Ltd, NBCC (India) Ltd, Bharat Electronics Ltd, National Fertilisers Ltd and Hindustan Copper Ltd, are on the list of probables for OFS where the government's shareholding in these companies is in the range of 52-82%. The market offering will be subject to the nod from the Prime Minister's Office and good market conditions to fetch high value of stake sale, said sources.

In the current fiscal, the government had announced there could be strategic disinvestments where the undertaking is still to be retained in government control, to go below 51 per cent to an appropriate level, on a case to case basis. It has also decided to modify the present policy of retaining 51 per cent government stake inclusive of the stake of government-controlled institutions as Finance Minister Nirmala Sitharaman had said in her Budget speech.

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