In order to tide over the revenue shortfall, the government has approved a proposal for diluting equity stake in blue chip companies Coal India, ONGC and NHPC, which is likely to fetch around Rs 43,000 crore to exchequer.
At present, the government shareholding in the coal mining company is 89.65 percent and will disinvest 10 percent stake worth around Rs 23,000 crore. Government stake in ONGC stands at 68.94 percent and will disinvest 5 percent stake worth Rs 18,000 crore. Besides these two, 11.36 percent disinvestment in hydro power generator NHPC was also approved. The government holds 85.96 percent stake in company and expected to garner worth Rs 2,800 crore respectively. The stake sale in the three companies would be done through the Offer for Sale (OFS) process, popularly known auction route. The government has already selected merchant bankers for managing ONGC and NHPC disinvestment and is in the process for Coal India.
The disinvestment proceed will help the government to narrow fiscal deficit as well as can be used to provide much-needed push to economic growth. Furthermore, the government is likely to take advantage of robust state of domestic stock markets helped by heavy inflow of funds from the foreign institutional investors (FIIs).
Meanwhile, the government has missed its disinvestment target for past five consecutive financial years. During FY11 and FY12, the government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year. In FY13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore. In the previous fiscal, the government was able to disinvest only around Rs 16,000 crore as against the set target of Rs 40,000 crore mainly on account of subdued economic and markets conditions.