The Government has stuck to its Rs 40,000-crore disinvestment target for the 2011-12 fiscal, with the Finance Ministry asserting that it is weighing several options for stake sale in PSUs despite uncertainty in the stock market.
“There is no reason to dispense with the target of Rs 40,000 crore. Options have been multifarious and various options have been listed out,” the Finance Secretary, Mr R.S. Gujral, told reporters here on the sidelines of the Head of National Drug Law Enforcement Agencies (HONLEA) meet.
The Government is considering various options, apart from the public offer route, to achieve the disinvestment target for the fiscal by way of shares buy-back, private placement of shares or asking cash-rich PSUs to buy equity in their peers.
“The roadmap, which envisages all alternatives, has obviously been formulated. The target of Rs 40,000 crore has not been diluted. Clearly, the actual disinvestment is dependent on the market situation,” Mr Gujral said.
“If the market situation becomes bad, it would be really unfair that disinvestment should be done in a very bad climate. But markets can improve anytime,” he added.
Seven months of the ongoing fiscal are over, but the Government has been only able to raise Rs 1,145 crore through a stake sale in Power Finance Corporation (PFC) and there are apprehensions that it may miss the Rs 40,000 crore target for 2011-12.
Volatile stock markets have forced the Government to delay its proposed stake sale in PSUs. Global equity markets have been on a downslide on fears over the spiralling debt crisis in the euro zone, as well as the credit crunch in the US.
Last fiscal, the Government raised over Rs 22,000 crore through stake sale in PSUs.
On the issue of bank recapitalisation, Mr Gujral said the Government will provide adequate capital to state-owned banks during the current fiscal to help them adhere to international solvency norms.
“There is no issue of additional funds being provided. We do have budgetary allocation... as is required it shall be made available and the capitalisation requirements of banks as per Basel-III will be met fully,” Mr Gujral said.
He further said the Government has already earmarked Rs 6,000 crore for the recapitalisation of public sector banks in the Budget for 2011-12.
During the current fiscal, several lenders — including SBI, Bank of Baroda, Syndicate Bank and Union Bank of India — would need fresh capital to meet global solvency norms.
In 2010-11, the Government had provided capital support to the tune of Rs 20,157 crore to public sector banks. The lenders, which got funds from the Government last fiscal include, Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce and UCO Bank.
On whether the Government would seek supplementary funds for bank recapitalisation in the current fiscal, he said: “As per Basel III, it (further capital) is not even required...
Whatever is required to meet the Basel-III norms, it would be provided.”
There have been talks that the Government could seek an additional Rs 14,000 crore for bank recapitalisation in the upcoming Winter Session of Parliament.