With higher expenditure plans for sectors including agriculture, health and education, the Centre will continue to depend heavily on revenue from stake sales in public sector units.
Accordingly, the Budget has targeted raising ₹80,000 crore as disinvestment proceeds next fiscal.
Though this is a tad lower than the revised estimate of ₹1 lakh crore from stake sales in 2017-18, it still amounts to the second highest target from PSU stake sales.
The Budget Estimate for disinvestment proceeds in 2017-18 was ₹72,500 crore.
Finance Minister Arun Jaitley also unveiled big ticket plans for stake sales in the next fiscal, including privatisation of state-owned Air India and merger and listing of three general insurance PSUs.
“Three public sector general insurance companies National Insurance Company Ltd, United India Assurance Company Ltd and Oriental India Insurance Company Ltd will be merged into a single insurance entity and will be subsequently listed,” he said.
The Department of Investment and Public Asset Management (DIPAM) will also announce more exchange traded funds (ETF) in 2018-19, including a debt ETF.
Jaitley also announced that the Centre has approved listing of 14 PSUs, including two insurance companies, on the stock exchanges.
“The government has also initiated the process of strategic disinvestment in 24 CPSEs, including strategic privatisation of Air India,” he added.
These would in effect be the first strategic stake sales by the NDA government in its current term, although it has been working on a blueprint for privatisation of PSUs.
Chief Economic Advisor to the Finance Ministry Arvind Subramanian had also listed privatisation of Air India as one of the key agenda for the government in the last year of its term in 2018-19.
Apart from the merger of state-owned ONGC and HPCL that yielded over ₹36,000 crore in this fiscal, analysts pointed out that a large part of the success of the Centre’s disinvestment programme was due to the equity markets doing well and it would have to be seen whether it can be sustained.
Anis Chakravarty, Partner and Lead Economist, Deloitte India, said, “The disinvestment story is clearly a positive and there could be a positive surprise for the next year if the broader market sentiment holds positive.”