Budget 2023: Government lowers divestment target to Rs 51,000 crore

Budget announcement: Finance Minister Nirmala Sitharaman on Wednesday said that the government will be revising its divestment target to Rs 51,000 crore by selling stakes in various state-run companies. In the last budget, the government intended to raise Rs 65,000 crore through divestments, which was later revised to Rs 50,000 crore. At present, the government is trying to work on the privatisation deal of number of central public sector enterprises, such as IDBI Bank, Shipping Corporation of India, NMDC Steel, BEML, HLL Lifecare, Container Corporation of India and Vizag Steel. All the disinvestment processes for these companies have already started and are at different levels, and are expected to be completed in the next fiscal.

The government has missed its budgeted disinvestment target last four years. As per the data on the DIPAM website, in the current fiscal, out of the budgeted amount of Rs 65,000 crore, 48 per cent or over Rs 31,106 crore has been collected as of January 18, 2023. These included Rs 20,516 crore proceeds from the LIC IPO, Rs 3,058 crore from ONGC's offer for sale, Rs 3,839 crore worth sale of Axis Bank shares held by SUUTI and Rs 2,723 crore from IRCTC's offer for sale.

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The Economic Survey 2023, which was tabled on Tuesday, stated that the government has earned about Rs 4.07 lakh crore as disinvestment proceeds in the past nine years. After 2014, the government has started engaging with the private sector as a co-partner in the development, the survey noted.

The survey highlighted that the privatisation of Air India re-ignited the privatisation drive in the country, and evidence shows that labour productivity and the overall efficiency of the PSUs disinvested during 1990-2015 has improved.

“During FY15 to FY23 (as of 18 January 2023), an amount of about Rs 4.07 lakh crore has been realised as proceeds from disinvestment through 154 transactions using various modes/instruments," said the Survey.

Of this, an amount of Rs 3.02 lakh crore was realised from minority stake sale and Rs 69,412 crore was realised from strategic disinvestment transactions in 10 public sector enterprises, which are HPCL, REC, DCIL, HSCC, NPCC, NEEPCO, THDC, Kamrajar Port, Air India and NINL.

The survey noted that the pandemic-induced uncertainty, the current geopolitical conflict, and the associated risks have posed challenges before the plans and prospects of the government's disinvestment transactions over the last three years.

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The Survey added that determined efforts should be taken to make the public sector asset monetisation scheme successful in realising wide-ranging efficiency gains. “If asset monetisation revenues are used to reduce public sector debt, the sovereign credit rating will improve, leading to a lower cost of capital. That will be the biggest fiscal stimulus to the economy,” the survey said.

The 2021-22 Budget had identified monetisation of operating public infrastructure assets as a key means for sustainable infrastructure financing.

In August 2021, the government listed projects worth Rs 6 lakh crore under the National Monetisation Pipeline (NMP), which were shortlisted to unlock value in infrastructure assets across sectors ranging from power to road and railways by fiscal 2024-25.