Centre might cut stake in govt-run firms to minimum to meet fiscal target

The Centre looks to reduce its stake in government-run companies to raise as much as Rs 1.05 lakh crore in the current financial year. The Central government will attempt to cut its share holding in state-run companies to the minimum required under the rules, Reuters quoted a government official as saying. 

The move comes in the backdrop of the Centre planning to raise Rs 40,000 crore from exchange-traded funds, the official reportedly said. It is expected that the government is looking to raise around Rs 30,000 crore from privatisation of state-owned companies in the current financial year. 

Last week, during her maiden budget presentation, Financial Minister Nirmala Sitharaman had lowered the fiscal deficit target to 3.3 per cent of the GDP from 3.4 per cent announced during the interim budget in February. This, she reasoned, was because the government was expecting a net additional revenue of Rs 6,000 crore over the interim budget estimates.

Department of Investment and Public Asset Management (DIPAM) secretary Atanu Chakraborty, had on Sunday, said that with the increasing of the divestment proceeds to Rs 1.05 lakh crore in the budget, the government was mulling to garner Rs 5,000 crore from the asset sale of central enterprises. Chakraborty had said that the government will follow a four-pronged strategy, including minority stake sales through IPO, FPO and ETFs, apart from strategic divestment and asset monetisation, to meet the disinvestment target. "Asset sales, specially when it comes to DIPAM, they are the nuttiest properties which they themselves have not been able to sell. Therefore, they are never so easy as it seems to people," he said.

Chakraborty said in the last two years, five CPSEs have been sold off which fetched about Rs 52,000 crore to the exchequer of the total Rs 1.90 lakh crore raised through CPSE stake sale. 

Source