The government of India missed its original disinvestment target of ₹1.75 lakh crore in FY22 by a huge margin, collecting only ₹13,531 crore, a report by Financial Express said. This was the lowest mop-up after the disinvestment program was revived in FY10.
A 5 percent stake sale in LIC via the IPO is likely to fetch the government around ₹65,000-70,000 crore, which was enough to achieve the revised (RE) disinvestment target of ₹78,000 crore (down 56 percent from the budget estimate of ₹1.75 lakh crore) for FY22. Without the LIC IPO, the government’s disinvestment receipts were just 8 percent of the budget estimate, and 17 percent of the RE, informed the report.
However, with the LIC IPO shifted to FY23, the government could set a new divestment record. Going by the current plan, the Centre’s disinvestment revenues could exceed the annual disinvestment target of ₹65,000 crore for the current fiscal in Q1 itself, thanks to the proposed LIC IPO, the report added.
The market volatility after the outbreak of Ukraine-Russia war has forced the government to postpone the proposed LIC IPO in March 2022, but it may hit market in April as market sentiment has improved.
"The department of investment and public asset management (DIPAM) will then have sufficient time to pursue other big-ticket transactions such as strategic disinvestment of IDBI Bank and Container Corporation of India in the remainder of the current financial year," it noted.
Before FY22, the disinvestment receipts were ₹14,000 crore against the target of ₹40,000 crore in FY12. Receipts of ₹1 lakh crore in FY18 was the highest disinvestment revenue garnered in a year, but a large chunk of this ( ₹36,915 crore) was due to the acquisition of HPCL by ONGC.
The first divestment in the new financial year FY23 was the 1.5 percent stake sale in oil explorer Oil and Natural Gas Corporation via offer for sale held on March 30-31 for ₹3,000 crore. Another ₹600 crore is expected from the buyback of shares by Gail India in April, stated the report.
Besides LIC IPO, some of the big-ticket strategic sales such as that of fuel retailer-cum-refiner BPCL and IDBI Bank, originally planned for FY22, may be taken forward in FY23. There is some concern among officials that the recent freezing in prices of petrol and diesel, which are decontrolled, by state-run fuel retailers may further delay its privatisation. The market value of the Centre’s entire stake in BPCL is worth about ₹43,000 crore at the current prices, the report informed.
The other big-ticket rollovers to the next financial year include the government’s proposed 45.48 percent stake in IDBI Bank worth about ₹22,000 crore at the current market prices. The expression of interest for IDBI Bank may be floated this month, added the report.