Volatility in stock markets should not deter the Government from going ahead aggressively with its divestment programme, industry body Assocham has said.
The Government would do well to focus attention on bringing follow-on share offers of large blue-chip public sector companies such as Coal India, Indian Oil and BHEL to achieve the divestment target of Rs 40,000 crore this fiscal, Assocham President Rajkumar Dhoot said at a press conference on Monday.
Outflow from debt
This would be a better strategy than trying to do divestments in several mid-size public sector companies that may fetch about Rs 400-1,000 crore for each transaction, according to Jagannadham Thunuguntla, co-Chairman of Assocham’s Capital Market Council.
Dhoot, who along with Thunuguntla released an Assocham study ‘PSU Divestment: FAQ on listing of PSUs’, said foreign institutional investors are moving most of the funds to the US from debt markets here and not the equity market.
“This should comfort the Government managers to continue disinvestment,” Dhoot said.
Good quality PSU divestments with right pricing could renew foreign investors’ interest in Indian equities. Despite the upheaval in financial markets, the Government must stay the course on disinvestments, Dhoot said.
The disinvestment department should not take a back foot because of the current capital market conditions, Thunuguntla said.
Rather, disinvestment provides an exceptional opportunity to bring more foreign money flows into India. Moreover, rupee is at a conducive point for global money to come in, Thunuguntla said.
“Disinvestment should not be a victim of capital market slowdown. It should be a medicine. There is a reason to be more aggressive on disinvestment front”.
The Assocham study has noted that the road to disinvestment has been bumpy. It has also highlighted that the four Ps of disinvestment — policy, promise, prognosis and performance — look grim.