India’s Disinvestment Pace Hits Record High, Exceeding Budget Target

The Indian government has accelerated its disinvestment and asset monetisation plan in the current fiscal year, securing 31% of its full-year budgeted target in the first quarter itself. The move aims to shore up revenues, particularly from non-tax sources, amidst rising expenditure on subsidies due to higher import bills.

Record-Breaking Disinvestment Pace

Recording the fastest pace of disinvestment ever in the first quarter of any fiscal, the period between mid-May and June this year saw one offer for sale from the government every week for disinvestment of public sector enterprises. This aggressive approach has yielded significant results, with the government garnering a cumulative Rs 18,561 crore from the sale of six public sector enterprises.

The six entities involved in the offer for sale (OFS) are Central Bank of India, Coal India, NHPC, NLC India, GIC, and IRFC. Additionally, the government has received Rs 6,367 crore from asset monetisation under the Infrastructure Investment Trust (InvIT).

Key Disinvestment Figures

As against the full year target of Rs 80,000 crore envisaged in the FY27 Budget, the government has so far raised Rs 24,928 crore from disinvestment and asset monetisation. The government has also firmed up a pipeline of public sector companies to be divested in the current fiscal, with the aim of exceeding the Rs 80,000 crore budgeted disinvestment target.

Fiscal Pressure and Disinvestment

• The government’s move to boost miscellaneous capital receipts or disinvestment and asset monetisation comes in the backdrop of a likelihood of expenditure exceeding budget estimates due to higher energy and fertiliser import prices.
• The fiscal deficit, which is the gap between income and expenditure, stood at over Rs 1.62 lakh crore or 9.6% of FY27 Budget target in the first two months of the fiscal.
• Miscellaneous capital receipts were 17% of the budgeted target, while revenue and capital expenditure were at 15.3% and 20.5% of the full year budget target at the end of May.

Key Takeaways

• The Indian government has accelerated its disinvestment and asset monetisation plan in the current fiscal year, securing 31% of its full-year budgeted target in the first quarter itself.
• The government has garnered a cumulative Rs 18,561 crore from the sale of six public sector enterprises and Rs 6,367 crore from asset monetisation under the Infrastructure Investment Trust (InvIT).
• The government aims to exceed the Rs 80,000 crore budgeted disinvestment target and has firmed up a pipeline of public sector companies to be divested in the current fiscal.

FAQs

What is the government’s disinvestment target for FY27?

The government has set a disinvestment target of Rs 80,000 crore for FY27, with a focus on boosting miscellaneous capital receipts and asset monetisation.

What are the key public sector enterprises involved in the disinvestment process?

The six public sector enterprises involved in the offer for sale (OFS) are Central Bank of India, Coal India, NHPC, NLC India, GIC, and IRFC.

What is the significance of the government’s disinvestment plan?

The government’s disinvestment plan is crucial in addressing the stress related to likely doubling of fertiliser subsidy bill to about Rs 3 lakh crore and crude oil imports amid the West Asia crisis, and the impact of the El Nino on the monsoon.

Conclusion

The Indian government’s accelerated disinvestment and asset monetisation plan has yielded significant results, with the government garnering a cumulative Rs 18,561 crore from the sale of six public sector enterprises and Rs 6,367 crore from asset monetisation under the Infrastructure Investment Trust (InvIT). The government aims to exceed the Rs 80,000 crore budgeted disinvestment target and has firmed up a pipeline of public sector companies to be divested in the current fiscal. As the government continues to push for disinvestment, it is essential to monitor the progress and address any challenges that may arise in the process.