The Disinvestment Department is in a tizzy; the poor monsoon forecast, combined with volatility in the stock market, is making the disinvestment target for the current fiscal year look challenging, a senior government official said here on Wednesday.
The Finance Ministry has targeted raising ₹69,500 crore through disinvestment in the current fiscal year. Of this, it aims to raise ₹41,000 crore through sale of a minority shareholding in Central Public Sector Enterprises (CPSEs) and ₹28,500 crore through strategic sales.
So far, there has been just one minority stake sale, with the Government selling 5 per cent in Rural Electrification Corporation and garnering ₹1,610 crore.
“(We) do not think markets will improve significantly in the second half of the current fiscal year. So, the ₹69,500 crore divestment target for FY16 looks daunting,” the official said. The remark follows the 1,000-point fall in the BSE Sensex after the weather department lowered its monsoon forecast on Tuesday, indicating a drought-like situation.
The official said market conditions are too volatile to go ahead with a stake sale. “We have created a ₹50,000 crore divestment pipeline, but can’t sell stakes now,” he said, adding that the impending US Federal Reserve rate hike decision may make things more difficult. If the Fed hikes the rate, it is feared foreign funds will move away, leading to a bigger market fall.
The Disinvestment Department has approval to sell a 5.15 per cent stake in over a dozen CPSEs, including ONGC, BHEL, NTPC, IOC, NALCO and NMDC. The Cabinet Committee of Economic Affairs has also given its nod for the Initial Public Offerings of two CPSEs — Hindustan Aeronautics Ltd and Rashtriya Ispat Nigam.
A stake sale in ONGC, expected to be the biggest after Coal India’s issue of over ₹20,000 crore, has been pending for long; Indian Oil, too, is pending. The CCEA had approved a stake sale in ONGC last October, while the go-ahead for Indian Oil was given last month. These two sales can together rake in over ₹20,000 crore at the current prices.
Strategic saleThe Centre is also looking at a strategic sale of some CPSEs — that is, a 51 per cent divestment, handing over management to a private party.
A few days ago, Finance Minister Arun Jaitley,said: “When I say strategic, there are some on which there is no difficulty in strategic sales. I think the Ministry of Tourism itself may take some initiatives.”
Later, it was indicated that eight Ashok Group hotels under the India Tourism Development Corporation, a CPSE, could be on the block soon. Government officials, however, refused to give any timeline for the sale.