Disinvestment mop-up to be much lower than target for FY24, say sources

As preparations for the Union Budget for fiscal 2024-25 gain momentum, the government is likely to undershoot the disinvestment target for the current fiscal by over 50 per cent.

This implies that the revised estimate for disinvestment revenues will likely be around Rs 20,000 crore or even less, compared to the target of Rs 51,000 crore. So far, the government has managed to raise only Rs 8,000 crore this fiscal.

Officials said the lower disinvestment proceeds would be on account of three significant disinvestment plans - NMDC Steel, Hindustan Zinc residual stake sale and IDBI Bank sale - not materialising by March 31, 2024.

The government had high hopes for the Hindustan Zinc residual stake sale, but issues related to demerger and reduced demand prevented the transaction from proceeding.

The proposed sale of the government's 50.79 per cent in NMDC Steel has been deferred due to opposition from the Congress-led government in Chhattisgarh.

Regarding IDBI Bank disinvestment, the government anticipates that the Reserve Bank of India's fit and proper criteria check will likely conclude this November. However, this would not leave enough time to conduct due diligence and execute the sale process.

In FY23, disinvestment receipts reached Rs 35,293 crore, which was 54 per cent of the targeted Rs 65,000 crore. The last time the disinvestment target was achieved was in FY19, when Rs 84,972 crore was mobilized against a target of Rs 80,000 crore.

Despite the disinvestment challenges, the government remains confident about dividends receipts. Currently, dividends amount to Rs 19,390 crore, with the budget estimating Rs 43,000 crore.

The government is hopeful of completing these three transactions, along with Shipping Corporation and CONCOR in the next financial year.

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