Friday, October 7, 2022

Budget 2019-20: Centre revises and ups disinvestment target

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New Delhi: The government has revised its disinvestment target to Rs 1.05 lakh crores for financial year 2019-20, up 16 percent from last year’s proceeds. In financial year 2018-19, the government had exceeded its disinvestment target for the fiscal by Rs 5,000 crores when it netted Rs 85,000 crores. For FY2019-20, however, the government had decided to keep the disinvestment target at Rs 90,000 crores.

The Finance Minister said, “Strategic disinvestment of select CPSEs would continue to remain a priority of this Government. In view of current macro-economic parameters, Government would not only reinitiate the process of strategic disinvestment of Air India, but would offer more CPSEs for strategic participation by the private sector.”

How does govt use the proceeds raised from disinvestment?

The funds raised via disinvestment form part of the non-tax revenue that comes to the Centre. A higher receipt from this vertical is crucial because there is uncertainty over meeting the indirect tax collection target, mainly the Goods and Services Tax (GST).

The government uses this money to stick to its fiscal deficit target.

Union Budget 2019 medium-term fiscal policy statement said that disinvestment receipts in 2020-21 and 2021-22 will be Rs 80,000 crore in each year.

DIPAM got a sizeable amount from ETFs

In 2018-19, the Department of Investment and Public Asset Management (DIPAM) had git a sizeable amount from Exchange Traded Funds — CPSE and Bharat 22. While two fund offerings of the Bharat 22 ETF in the previous financial year yielded Rs 18,729.
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85 crore, CPSE ETF rakes in Rs 26,500 crores.

Strategic sale

The Centre raised Rs 1,000 crore from the strategic sale of Dredging Corp to a consortium of four ports and Rs 2,000 crore from the sale of enemy shares in March. It also completed two initial public offerings of Mazagon Docks and MSTC.

Centre had exceeded disinvestment target in FY18

The government had exceeded its disinvestment target of Rs 72,500 crores in financial year 2017-18 when it netted Rs 1 lakh crore, mainly on the back of deals like ONGC acquiring the government’s stake in HPCL for Rs 36,915 crore.

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