Govt may target Rs 35,000 cr from disinvestment in FY24

The centre is eyeing a lower disinvestment target for the next fiscal amidst the ongoing market condition. Finance Ministry sources say the government may target disinvestment revenue of around Rs 30,000 to Rs 35,000 crore in 2023-24 versus Rs 65,000 crore in the current year. "Disinvestment has to be a market-based activity, and in the current situation, the bandwidth is decreasing. There has to be moderation in the targets," said an official.

The disinvestment target of Rs 65,000 crore for the current year is unlikely to be met. Because of market conditions, the proposed sale of BPCL did not materialise, the realisation from the Life Insurance Corporation of India (LIC) was much lower than expected and proceeds of the IDBI Bank sale are expected only by June 2023. "Our current target is not a low target either. We are expecting the first tranche of proceeds from the sale of Hindustan Zinc to be added to the current disinvestment target”, the official added.

"The whole issue about large and small targets is because of the earlier targets we set. Our early targets were higher, and realistically, they may not have been possible. It is difficult to predict how much disinvestment the government can do because of the market conditions. It is realistic to go with a moderate target, " said another official from the finance ministry.

The centre is also in the process of selling Concor and soliciting expressions of interest for the Shipping Corporation of India. The sale of Pawan Hans, which has currently been on hold, would have hardly given the government Rs 200 crore, and BPCL, which is currently off the table, could have helped meet the target.

"It should not just be about the disinvestment receipts but rather about the valuation of the company. We should not be hell-bent on destroying the value; otherwise, the market and minority shareholders will take the government for granted. Investment is a balancing task, and a lot depends on supply and demand. We cannot keep on opening supplies if the value is gone and shareholders have lost trust," added an official from the financial ministry.

Currently, the centre’s receipts from disinvestment stand at Rs 24,544 crore. It is just 38 per cent of the annual target presented in the Budget for 2022-23. A major chunk of this, close to Rs 20,500 crore, was achieved only via the sale of a 3.5 per cent stake in the LIC.