Budget 2020: Govt trebles disinvestment target; LIC, BPCL and Air India form big-ticket line-up

The government has trebled the target for disinvestment proceeds from Rs 65,000 crore (revised estimate) in 2019/20 to Rs 210,000 crore in 2020/21. This is a huge jump in the budget estimate for 2020/21 given the government has to revise downward its 2019/20 budget estimate of Rs 105,000 crore to Rs 65,000 crore.

Till December 2019, the government has received only Rs 18,000 crore worth of disinvestment proceeds.

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This year's disinvestment target has two components - Rs 120,000 crore from disinvestment receipts and Rs 90,000 crore from disinvestment of PSU banks and financial institutions.

According to finance secretary Rajeev Kumar, the government expects to raise Rs 90,000 crore through sale of stakes in state-owned life insurance company LIC and IDBI Bank.

The finance minister in her Budget speech said the government is proposing to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange. At present, the Government of India holds 47.11 per cent stake in the bank. At the current market price, government's stake in IDBI Bank would fetch it over Rs 18,250 crore. The rest of it is expected to come from a stake sale in LIC.

When asked about the steep target for disinvestment proceeds in 2020/21, FM Nirmala Sitharaman said the target for the current financial year was set by her in the July Budget, and that between July and January, a lot of work has gone into achieving the target. "You will see successful disinvestment in the next few months but the accounts for this year will be closed by 31 March 2020. Now, a lot of leg work has been completed, the benefits of which would be realised next year," she said.

Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), said: "Several transactions are lined up - Air India expression of interest (EoI) is out; very soon BPCL EoI would be out too. Some of the disinvestments would be completed this year but many of the big ones would be complete next year. Therefore, we are very hopeful (that) we will be achieving the disinvestment targets."

On 20 November last year, the government has taken decisions on many big-ticket disinvestments. These include disinvestment of Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India Container Corporation of India, Tehri Hydro Power Development Corporation (THDCIL), and North Eastern Electric Power Corporation Ltd (NEEPCO).

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