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Govt could cut down FY20 disinvestment target by 60%

The Central government is likely to reduce its 2019-20 disinvestment target by nearly 60 percent as it looks difficult that it will meet the target

Govt could cut down FY20 disinvestment target by 60%
Govt could cut down FY20 disinvestment target by 60%

New Delhi: The Central government is likely to reduce its 2019-20 disinvestment target by nearly 60 percent as it looks difficult that it will meet the target it set for itself in this financial year. According to a report in the Deccan Herald, the Centre could cut down its disinvestment target by about Rs 40,000 crore, an official privy to the development said. “It is difficult to reach the budget target of PSU share sale this year,” the report quoted a senior official as saying.

Why govt’s disinvestment target may spill over to next fiscal?

The primary cause for lowering of the disinvestment target is believed to be the poor response of potential buyers towards Air India and the delay in preparing a bid document for BPCL (Bharat Petroleum Corporation Limited) and the following due diligence. Despite roadshows in London and Singapore, only a handful of investors have shown interest in the national air carrier. And for BPCL, the government is yet to release a bid document.

In the current financial year, the Centre has managed to mop up a little over Rs 18,000 crore through disinvestment so far, and another Rs 39,000 crore to Rs 40,000 crore is likely to be generated through offer-for-sale (OFS) of around 10 PSUs in which the government holds major stakes. Coal India, NTPC, NMDC, Bharat Electronics Ltd and National Fertilizers Ltd are firms in which the government owns up to 82 percent stake.

The backdrop

The Centre plans to sell 100 percent of its stake in Air India and over 53 percent stake in BPCL. The sales could have garnered a major chunk of the Rs 1.05 lakh crore target. An announcement in this regard was made by Finance Minister Nirmala Sitharaman in November 2019. While presenting the interim Budget in February 2019, the government had kept the disinvestment target near Rs 90,000 crore. However, in the July Budget, the target was raised to Rs 1.05 lakh crore.

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