Rs 13,561 crore — what Modi govt got from disinvestment in 2021-22, just 8% of original target

Since 2014, shortfall in disinvestment targets was highest in 2021-22 in percentage terms, even though absolute figure peaked last year at Rs 1.72 lakh crore.

The only company that the government managed to privatise last year was the national carrier Air India, sold to the Tata group | File photo: Commons

New Delhi: The Narendra Modi government has missed its disinvestment target, yet again, by a huge margin. According to the website of the Department of Investment and Public Asset Management (DIPAM), the total receipts on account of disinvestment stood at Rs 13,561 crore on 31 March 2022, which is Rs 1.61 lakh crore less than the original budgeted target of Rs 1.75 lakh crore.

The target for 2021-22 was revised down to Rs 78,000 crore, or around 40 per cent of the original, when the government presented the Union Budget on 1 February this year.

According to the initial target, privatisation of state-owned firms was likely to fetch the government around Rs 75,000 crore, while disinvestment — selling minority stake in PSUs — was expected to bring in Rs 1 lakh crore.

However, as a result of the lack of revenue from disinvestment, there is a large gap that the government has had to cover with other sources of revenue. Initial estimates suggest the government has managed to garner Rs 1 lakh crore more than what was budgeted from taxes in 2021-22. This is, however, not enough to make up for the disinvestment shortfall, which is estimated at 0.8 per cent of the GDP.

Government officials ThePrint spoke to said they were aware the target was difficult to achieve, but did not expect such a huge shortfall.

“A major reason for such a massive shortfall is the inability of the government to list the Life Insurance Corporation (LIC) in the last financial year, which was supposed to fetch the bulk of disinvestment revenue,” one of the government officials said.

Moreover, with the advent of the second Covid wave in the country, in the April-June quarter of 2021, and the subsequent volatility in the market till the third wave in January, delayed its plans to privatise some of the big companies, including Bharat Petroleum Corporation Ltd. (BPCL), Shipping Corporation of India (SCI), Project and Development Limited (PDL), Engineering Projects India Limited and Pawan Hans Limited.

Comparing past performances

This is, however, not the first time the government has missed its disinvestment target. Only six times has the government managed to meet its targets since the economy was liberalised in 1991.

In the second stint of the Modi government, starting 2019, the disinvestment target has not been met even once yet. The extent of misses, meanwhile, has been quite large, ranging from 50 to 90 per cent of the target. During Modi’s first stint as PM, between 2014-19, the government had met the target in three of the five years.

While in absolute terms, the shortfall in the disinvestment target since 2014 was the highest in the 2020-21 financial year — Rs 1,72,103 crore — because of a higher target (Rs 2,10,000 crore), in percentage terms, the figure has been the highest in 2021-22, at 92 per cent of the budgeted target.

Setting conservative targets for 2022-23

The focus on selling shares through an initial public offer or selling minority stake in state-owned companies through offer for sale has reduced. Instead, the government is now laying all emphasis on privatisation of state-owned firms.

The only company that the government managed to privatise last year was the national carrier Air India, sold to the Tata group for Rs 18,000 crore. Of this, only 15 per cent went to the government, while the rest went in clearing debts incurred by Air India.

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 last financial year.

For 2022-23, the government has set a modest disinvestment target of Rs 65,000 crore, which can probably be met just by listing the LIC alone.

Experts believe the government has realised not to rely on disinvestment receipts to meet the fiscal deficit every year and therefore, it is best to keep the targets conservative.

“FY23 budgeted disinvestment proceeds at Rs 65,000 crore appears conservative,” said Shubhada Rao, an economist and founder of research firm QuantEco, adding that more effort needs to be galvanised to generate capital receipts by unlocking value in public sector assets.

(Edited by Poulomi Banerjee)