After falling short of the disinvestment mop-up targets this financial year as well as in the previous one, the government aims to mobilise 25 per cent less through selling stakes in state-owned companies in the next financial year.
“The government will raise about Rs 14,000 crore from disinvestment in 2011-12, against a target of Rs 40,000 crore. For 2012-13, I propose to raise Rs 30,000 crore through disinvestment,” Finance Minister Pranab Mukherjee said in his Budget speech.
Terming next year’s disinvestment target ‘plausible’, market experts said the secondary market and foreign flows need to remain supportive to help achieve the target. The government missed the disinvestment targets in the current financial year and the previous one by huge margins, and this had contributed to the fiscal deficit. The government uses proceeds from the disinvestment programme to reduce fiscal deficit and invest in social sector schemes.
Mukherjee also said the government was committed to retaining 51 per cent ownership and management control in public sector entities.
So far this financial year, the government has achieved only a third of the targeted Rs 40,000-crore disinvestment mop-up. It sold stakes in only two companies, ONGC and Power Finance Corporation, raising about Rs 14,000 crore.
Though the companies lined up for disinvestment in 2012-13 were not formally announced, Steel Authority of India, Hindustan Copper, Bharat Heavy Electricals Limited (BHEL) and CoalIndiaare expected to be the likely candidates.
Recently, the Securities and Exchange Board of India had introduced two routes, offer for sale (OFS) and institutional private placement, which are likely to aid the government in stake sales in the future.
V Jayasankar, senior executive director and head (equity capital markets), Kotak Mahindra, said, “The new disinvestment target looks more realistic and can be achieved, as the market has improved. The new OFS route, after some fine-tuning, would be used for disinvestment.”
Market experts said state-owned companies like Coal India and BHEL were good disinvestment candidates.