Govt could target Rs 35,000 cr divestment in FY24
The center is considering a lower divestment target for the next fiscal year in the current market environment. Finance Ministry sources say the government could target divestment income of around Rs 30,000-35,000 crore in 2023-24 compared to Rs 65,000 crore in the current year. “Divestment needs to be a market-based business, and in the current situation, bandwidth is shrinking. There needs to be moderation in the goals,” an official said.
The divestment target of Rs 65,000 crore for the current year is unlikely to be met. Due to market conditions, the proposed sale of BPCL did not materialize, the realization of the Life Insurance Corporation of India (LIC) was well below expectations and the proceeds from the sale of IDBI Bank did not materialize. is expected that by June 2023. “Our current target is We expect the first tranche of proceeds from the sale of Hindustan Zinc to be added to the current divestment target,” the official added.
“The whole problem of big and small goals is because of the earlier goals we set. Our first goals were higher and realistically they might not have been possible. It’s hard to predict how much divestment the government can do because of the market. It’s realistic to go with a moderate target,” said another finance ministry official.
The center is also in the process of selling Concor and soliciting expressions of interest for the Shipping Corporation of India. The sale of Pawan Hans, which is currently on hold, would have barely given the government Rs 200 crore, and BPCL, which is currently off the table, could have helped achieve the target.
“It shouldn’t just be about the divestment proceeds, but rather about the valuation of the business. We shouldn’t be bent on destroying the value, otherwise the market and minority shareholders will take the government for granted. “Investment is a balancing act, and a lot depends on supply and demand. We cannot continue to open supplies if the value is gone and shareholders have lost confidence,” an official from the Ministry of Finance added. Finance.
Currently, the centre’s revenue from divestment stands at Rs 24,544 crore. It represents only 38% of the annual objective presented in the 2022-2023 budget. Much of this, nearly Rs 20,500 crore, was only realized via the sale of a 3.5% stake in the LIC.