Will The Government Raise The Divestment Target In FY14?

In the budget speech for FY13, the then Finance Minister, Pranab Mukherjee, had estimated raising Rs 30000 crore from the divestment of the government’s stake in PSUs. Till date, the government has raised Rs 21500 crore, which is almost 70% of the budget estimates. The government has now reduced its target for divestment by 10% from Rs 30000 crore to Rs 27000 crore by March end.

The divestment process, which was inertial till the beginning of the third quarter of the current fiscal, has seen some much awaited pace with the market showing some strength. The Department of Divestment has already identified 20 PSUs for the purpose stake offloading in the next fiscal. The success witnessed in the recent stake sales will surely enthuse the government in this regard. A 9.5% stake divestment from Oil India helped it to garner Rs 3114 crore, and a 10% offloading from NTPC through an offer for sale (OFS) fetched Rs 11469 crore.

A leading daily has reported said that the divestment department has begun talks with administrative ministries for offloading stake in companies like Coal India, Indian Oil, PGCIL, NHPC and National Electric Power Company. The Cabinet has already given its approval to divest the government’s holding in BHEL, Neyveli Lignite and HAL.

Looking at the foreign fund inflows that India has witnessed since the beginning of the current year, it can be said that in the upcoming budget, the Finance Ministry may raise the divestment target from the present budget estimates of Rs 30000 crore.