Will Centre miss its disinvestment target again?

The government's budgetary proposal to raise Rs 1.75 lakh crore from disinvestments and strategic sales in 2021-22 is not gaining pace because of the chaos around second wave of COVID-19 infections. Since the infection rate is receding in the country, the sale process is expected to restart from September-October, said an industrialist, who is looking to acquire some of the assets.

"We have only a month more to complete the first quarter of this financial year. So far there is no progress in this period after inviting expressions of interest (EoIs) months back in the case of most of the assets. There is no clarity on the asset qualities and financial liabilities. Now the question is whether the government will be able to facilitate the due diligence processes in a short window of 4-5 months and complete it before the next budget in February 2022," said an investor.

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The disinvestment plan includes sale of assets like BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans and Neelachal Ispat Nigam. The IPO of LIC will be another major stake sale. Besides, the government looks to monetise the operating public infrastructure assets for finding funds for new infrastructure creation.

The government intends to complete the sales in this financial years itself as disinvestment will be one major source of income to bridge the widening fiscal deficit.

Vedanta group had put in an EoI for buying the government's 52.98 per cent stake in BPCL. Two global funds, including Apollo Global Management, had also submitted EoIs. Tata group was among the few entities that had shown interests in buying the loss-making Air India, for which EoIs were invited in December last year.

Finance Minister Nirmala Sitharaman had proposed in the Budget to create a National Monetisation Pipeline, comprising potential brownfield infrastructure assets. The asset monetisation dashboard is also part of the plan for tracking the progress and to provide visibility to investors. Under the plan, National Highways Authority of India (NHAI) and Power Grid Corporation (PGCIL) will sponsor one InvIT each for attracting international and domestic institutional investors. Five operational roads with an estimated enterprise value of Rs 5,000 crore will be transferred to the NHAI InvIT. Similarily, transmission assets with a joint value of Rs 7,000 crore will be transferred to the PGCIL InvIT.

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Indian Railways also plans to monetise the dedicated freight corridors, leasing them for operations and maintenance after commissioning, under the proposal. The next lot of airports will also be monetised for operations and management concession.

Besides, the government wants to roll out other core infrastructure assets like operational toll roads of NHAI, transmission assets of PGCIL, oil and gas pipelines of GAIL, IOCL and HPCL, airports in Tier II and III cities, railway infrastructure assets, warehousing assets of Central Warehousing Corporation and NAFED, and sports stadiums.

The government failed to meet its disinvestment target in the last financial year and has been able to raise just Rs 32,835 crore. The disinvestment of assets that got delayed because of COVID-19 will be completed in 2021-22, Sitharaman had said during the Budget presentation.

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