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Centre Gets Cracking on Disinvestment
Aug 21, 2017

After three years of underachieving its disinvestment targets, the government is back with a bang. This time, it wants to focus on strategic stake sales of non-public sector units (PSUs) and areas where disinvestment has so far been poor. FY15-16 saw no disinvestment through this route.

For FY18, the total budgeted disinvestment target has been set at Rs 725 billion. Of this, Rs 465 billion is expected to come from minority stake sales, buybacks, mergers, public listings, and the CPSE ETFs. Rs 150 billion is likely to come from strategic sales. And the balance Rs 110 billion from listing of state-owned general insurance companies.

The biggest strategic disinvestment planned for this fiscal is the 51% stake sale in Hindustan Petroleum to ONGC. At current valuations, this deal would fetch the government more than Rs 300 billion, surpassing its strategic sale target for the year.

The disinvestment program has made slow progress so far. But as the government steps up public investments to spur economic recovery, it is leaving no stone unturned to shore up its revenues. To expedite the disinvestment process, it will set up a high-powered committee of ministers whose goal will be to reduce the time it takes to identify a company for strategic disinvestment. The committee will be comprised of the Finance Minister, the Transport and Highways Minister, and the minister of the administrative department of the company earmarked for strategic sale. Whether these efforts yield results only time will tell.

Data Source : Business Standard

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