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Virus may make govt miss revised divestment target for FY20

The market, which is reeling under the impact of Coronavirus outbreak, has raised the risk of failure on the part of the govt in meeting its divestment target for FY20

Virus may make govt miss revised divestment target for FY20
Virus may make govt miss revised divestment target for FY20

New Delhi: The secondary market, which is reeling under the impact of Coronavirus outbreak, has raised the risk of failure on the part of the government in meeting its divestment target for FY20. In February, Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2020, had revised the divestment target for FY20 to Rs 65,000 crore from Rs 1.05 lakh crore. However, sources in the know of the matter said on Thursday that there could be a shortfall of Rs 15,000 crore due to weak market conditions.

Govt mulls dropping OFS, buybacks planned to meet FY20 divestment target

A source said that the impact of Coronavirus on the market has been a matter of concern for the government. And it is now considering dropping the OFS (Offer for Sale) and share buyback plans for the ongoing financial year. According to DIPAM (Department of Investment and Public Asset Management), the government has so far received Rs 32,963.85 crore in divestment proceeds this financial year. It received another Rs 1,881.21 crore from selling enemy property.

The backdrop

At least five-six minority stake sale in various PSUs and the NTPC-THDC-NEEPCO deal were expected to help the government meet the revised divestment target of Rs 65,000 crore before the end of FY20. The government was mulling OFS for a number of PSUs like Coal India, NBCC, NLC, HUDCO and NALCO, among others. The Centre has already started the process for the OFS of minority stake in three defence PSUs — GRSE, HAL and BDL. The notifications for the same have been released between January and February so far.