Union Budget 2024: No more disinvestment targets, govt takes a new approach

The Centre plans to continue the approach introduced in the last interim budget in February by not setting specific disinvestment targets in the full Budget to be presented this July. Instead, disinvestment will be categorized under capital receipts, as was the case earlier this year.

"We have already changed the disinvestment strategy by letting go off the target. The budget item of other capital receipts is going to list disinvestment and asset monetisation pipeline under one," a government official said.

Historically, the term ‘disinvestment’ was mentioned in Union Budget documents, starting with the 1991-92 budget, which set a target of Rs 2,500 crore. This figure peaked at Rs 2.10 lakh crore, including the sale of government stakes in central public sector undertakings, public sector banks, and financial institutions for FY21. 

"We have changed our strategy to now a value-creating strategy from a target-based strategy," the official said, adding that “it was not a fire sale process, but a calibrated approach”.

The Public Sector Enterprises policy, part of the Aatmanirbhar Bharat initiative announced in 2020, aims to minimize the government’s presence in such undertakings, including financial institutions, and open up new investment opportunities for the private sector. This policy divides sectors into strategic and non-strategic categories.

Strategic sectors include Atomic Energy, Space and Defence, Transport and Telecommunications, Power, Petroleum, Coal, and other minerals, Banking, Insurance, and financial services. In these sectors, the public sector will maintain only a minimal presence. The remaining CPSEs in these sectors will be privatised, merged, subsumed into other CPSEs, or closed. In non-strategic sectors, CPSEs will either be privatised or shut down.

The interim budget listed disinvestment under the general category ‘Miscellaneous Capital Receipts’ without directly mentioning ‘disinvestment.’ The description now includes “receipts on account of management of equity investments and public assets through various mechanisms.” Previously, the term ‘disinvestment’ was explicitly listed under ‘Miscellaneous Capital Receipts.’

Sources tell Business Today Television that the ongoing transactions, such as those involving IDBI and HLL Lifecare, are high priorities for the government, with movement on IDBI disinvestment expected within this year.

"Our focus is to complete sale processes in the pipeline. The ones we are not able to conclude, we shall go for re-bidding," the official shared.

The Centre has set an estimate of Rs 50,000 crore under miscellaneous capital receipts for the Interim Budget FY25, which is likely to remain the same, in the upcoming full budget.