No sooner had the Finance Minister Nirmala Sitharaman finished her Budget Speech a discussion started on the scaled down disinvestment target proposed in the Union Budget for 2022-23 and whether the government has factored in the much awaited LIC IPO or is it being delayed.

The Finance Minister, Nirmala Sitharaman, addressing the media after the Budget presentation, said that LIC IPO in all probability will be going through in this fiscal year. 

The Budget has revised the disinvestment target for the current fiscal at ₹78,000 crore (as against Budgeted level of ₹1,75,000 crore). For 2022-23, the Centre has pegged the disinvestment target at ₹65,000 crore. 

In her speech, the Finance Minister said that “towards implementation of the new Public Sector Enterprise policy, the strategic transfer of ownership of Air India has been completed. The strategic partner for NINL (Neelanchal Ispat Nigam Limited) has been selected. The public issue of the LIC is expected shortly. Others too are in the process for 2022-23.”

Stating that one “should not conjecture” LIC IPO size based on the revised estimate, Tuhin Kanta Pandey, Secretary, DIPAM said that LIC’s draft red herring prospectus is expected to be filed with SEBI in next two weeks.

“Valuation of LIC is yet to reach final conclusion based on which we will determine the size. There has been instances of actual receipts being different from revised estimate figures. You should not read too much into latest revised estimate revision,” Pandey said at post-Budget press conference. 

“If we keep too high a target, it distorts the market. There is nothing that stops us from achieving when we want to achieve in disinvestment,” he added. Pandey also said that the Centre is moving on a faster way on privatisation and emphasis is on implementation of transactions.

Sitharaman highlighted that government has been progressing in its privatisation programme and has been “very realistic in telling what we do and achieve what we have said”

In another proposal in the Budget the Finance Ministry has proposed changes to Section 79 of the Income Tax Act to facilitate strategic disinvestment of public sector companies. The amendment will remove a restriction on carry forward and set off of unabsorbed losses of public sector companies that are put through strategic disinvestment.

It will ensure that the set off of past losses would be available even after the control in them changes hands to new buyers. This latest Budget proposal is expected to come in handy for Air India, which was recently privatized and control has been handed over to the Tata Group, according to industry observers.

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