DoD wants disinvestment target to be scaled down to Rs 30k crore

27 Oct 2015 Evaluate

Amid volatility in the stock markets, the department of disinvestment (DoD) wants that PSU stake sale target to be more than halved to Rs 30,000 crore for the current financial year, stating that this target seems more reasonable given that there is no big stock to sell.

For the fiscal year 2015-16, the government has targeted to raise Rs 69,500 crore through disinvestment, 180 per cent higher than the total amount garnered from PSU share sales in the previous fiscal. Out of the total budgeted target, Rs 41,000 crore is to come from minority stake sale in PSUs and the remaining Rs 28,500 crore from the strategic stake sale. In order to achieve the target the growth rate in disinvestment, proceeds would need to be around 180 per cent which is much higher than the tax revenue growth rate of 16 per cent and that of government bonds of 10 per cent

The government has a pipeline of over 20 PSUs for disinvestments in 2015-16. These include 10 per cent stake sale each in Oil India (OIL), National Aluminium Company (Nalco), National Mineral Development Corporation (NMDC), and five per cent each in National Thermal Power Corporation(NTPC), Oil and Natural Gas Corporation (ONGC) and Bharat Heavy Electricals (BHEL). Besides, plans are afloat for a 10 per cent stake sale in Coal India. However, volatile market conditions have dented the prospects of a stake sale, with the recent disinvestments of IOC and PFC facing rough weather.

For the current financial year, with seven months to be over, the government has been able to sell stake only in four companies including Power Finance Corporation (PFC), Rural Electrification Corporation (REC), Dredging Corp and Indian Oil Corporation (IOC) to net Rs 12,600 crore.

For five consecutive financial years, the government has missed its disinvestment target. During last financial year out of the total target of Rs 58,425 crore, the government raised around Rs 25,000 crore. The Rs 58,425-crore target included Rs 43,425 crore from minority stake sale and Rs 15,000 crore from residual stake sale in erstwhile PSUs.

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