New Delhi: The Narendra Modi government is expected to miss its 2021-22 disinvestment target of Rs 1.75 lakh crore by about Rs 60,000 crore as the privatisation of the Bharat Petroleum Corporation Ltd (BPCL) is not likely to go through before the financial year ends.
In the last fiscal, 2020-21, the government set a disinvestment target of Rs 2,10,000 crore in the Union Budget, and missed it by a whopping Rs 1,78,000 crore. The government had set an ambitious target of Rs 1,75,000 crore in the Union Budget 2021-22, with over a third of the receipts targeted from the listing (of shares for part sale of the government’s stake) of Life Insurance Corporation and privatisation of BPCL. Experts have estimated that listing of LIC itself is likely to fetch the government around Rs 1 lakh crore.
The target is a mix of receipts from the privatisation of some public sector enterprises and from the sale of the government’s minority stake in other PSUs.
While the disinvestment department has assured that the initial public offer of LIC would take place before 31 March 2022, the sale of BPCL, where the government is to sell its entire stake of 52.98 per cent, is in limbo as the bidders for the company have not been able to find partners who can buy the company with them.
“BPCL (sale) now looks highly unlikely since we are left with only three months and there has been no movement on the stake sale,” a government official told ThePrint on the condition of anonymity.
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Deals in concluding stages
The rest of the companies listed in the Budget for privatisation included Shipping Corporation of India, Air India, Neelachal Ispat Nigam Limited, Container Corporation of India, IDBI Bank, BEML Limited and Pawan Hans, among others.
The Air India transaction has been successfully concluded, but the government is yet to completely hand over the airline to Talace Private Ltd, a subsidiary of Tata Sons. According to the official, the government is in the final stages of concluding the sale of Shipping Corporation of India and Neelachal Ispat.
Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey recently said the government has received financial bids for Pawan Hans and Neelachal Ispat, and now the process of their privatisation has moved to its concluding stage.
The list of companies to be privatised in 2021-22 also included IDBI Bank. Other than this, the government was also likely to privatise two state-owned banks and one insurance company. However, the money from the sale of these entities was not part of the disinvestment target budgeted for the current financial year.
Fiscal deficit target may be hit
So far, the sale of stakes in state-owned firms has fetched the government around Rs 9,330 crore. This amount does not include the Rs 2,700 crore it will receive from Air India and another Rs 210 crore from the sale of Central Electronics.
With the likely shortfall of Rs 60,000 crore in the disinvestment receipts, the government’s fiscal deficit target could take a hit of 0.3 per cent of the GDP.
Chief Economic Adviser Krishnamurthy Subramanian, in his last press conference before demitting office, had said that high growth in tax revenue in the current year will be able to make up for the revenue shortfall from disinvestment.
For 2021-22, the government has fixed a fiscal deficit target of 6.8 per cent of the GDP.
Fiscal deficit is defined as the gap between revenue and expenditure of the government, where the latter is higher than the former.
(Edited by Saikat Niyogi)
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