BackBPCL, IDBI Bank, Shipping Corp gain on govt's plan to sell assets
Centre announces Rs1.75 trillion divest plan in Budget 2021 to boost government spending
PremiumShares of Bharat Petroleum Corp. Ltd (BPCL), IDBI Bank Ltd and Shipping Corp. of India Ltd surged after finance minister Nirmala Sitharaman announced in her budget speech that the Centre plans to raise Rs1.75 trillion by divesting its shares in the state-owned companies.
The government is also planning to privatize Air India Ltd and sale a part of its stake in Life Insurance Corp. of India (LIC) in 2021-22, besides seeking buyers for two other public sector banks, Sitharaman said.
Selling assets will be key to Prime Minister Narendra Modi's administration to increase spending. Considering that the government has failed to achieve its ambitious divestment targets over the years, investors will be keen to see some big-ticket sales in FY22. So far, the Centre did not even manage to meet 10% of the Rs2.1 trillion target it had set for FY22.
While BPCL shares gained 2%, Shipping Corp. was up 3.3% and the IDBI Bank stock rose 11%.
Mint had reported that the government was planning to sale its stake in IDBI Bank gradually. In January 2019, India’s largest insurer, LIC, had bought a 44% stake in IDBI Bank for Rs21,624 crore to help the public sector lender stay afloat. After the stake purchase, LIC holds a 51% in the bank.
On 22 December, the government invited bids to sell its 63.75% stake in Shipping Corp. It is also looking to raise around Rs90,000 crore from the privatization of BPCL.
(Bloomberg contributed this copy)
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