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For the first time in many years, the Centre is expected to meet its disinvestment target. It expects to raise close to ₹45,500 crore from its disinvestment programme.
Officials estimate that disinvestment would bring in receipts of at least ₹44,000 crore, if not the full targeted amount.
The Centre’s total receipts from disinvestment are also estimated to be at an all time high this fiscal.
Buybacks, PSU fundsBut, instead of going for pure disinvestment issues such as listing, follow on offers and strategic sales that were expected to improve the functioning of public sector units (PSU), the Centre has relied more heavily on share buybacks and the PSU exchange traded fund.
It had raised ₹42,132 crore from stake sales of public sector units in 2015-16. The Budget has set a target of ₹72,500 crore from disinvestment for the next fiscal.
Aiding this would be the share buyback announcements by public sector Oil India Ltd and Engineer’s India Ltd that are expected to raise ₹1,527 crore and ₹658.8 crore respectively.
Announced as part of the capital restructuring guidelines for state run firms in May 2016, share buybacks by PSUs including Nalco, NMDC and Coal India Ltd have already helped bring in ₹15,585 crore.
According to data with the Department of Investment and Public Asset Management, it has raised ₹39,368.7 crore this fiscal as disinvestment proceeds including stake sale of SUUTI holdings in L&T and ITC.
Most recently, the third tranche of the government’s PSU-ETF received bids for over ₹9,200 crore as against the target of ₹2,500 crore.
With direct tax collections slightly subdued, meeting the disinvestment target would also provide significant relief to the Exchequer in bridging the fiscal deficit that is estimated at 3.5 per cent of the GDP in 2016-17.
In the Revised Estimates for 2016-17 that was presented along with the Union Budget 2017-18, the Centre had lowered its disinvestment target from the earlier estimate of ₹56,500 crore.
Despite plans, it has however, been unable to complete even one strategic disinvestment in a PSU this fiscal.
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