The government’s disinvestment programme appears to have come undone due to lacklustre market conditions and the reluctance of the bureaucracy to push strategic sale of public sector units for fear of enquiry.

Budget 2015-16 had targeted raising ₹69,500 crore from PSU stake sale (₹ 41,000 crore from minority stake sale and ₹ 28,500 crore from strategic sale), but the Centre has been able to mop up ₹ 12,701 crore via the first route.

The second route, according to government sources, will remain a no go area till a water-tight process is in place for strategic sale. The need for such a policy has become imperative with officials facing allegations of wrong-doing and corruption. Strategic sales happened last during the previous NDA government.

This policy is taking time to make, and the Finance Ministry expects to have process ready only by the next fiscal. And, when that happens, first to go off the shelf will be IDBI Bank.

“IDBI Bank will be first up for strategic sale. The proposal is in final stages but market valuations have to be right,” said a Finance Ministry official, adding that it could be on the lines of Axis Bank, which was formerly UTI Bank. The Centre holds 76.50 per cent in IDBI Bank and, according to officials, it may not fully exit the bank even after a strategic sale of its equity, but become a minority stakeholder. A public financial institution, IDBI was converted into a bank under the Industrial Development bank (Transfer of Undertaking and Repeal) Act, 2003.

Besides IDBI Bank, also on the strategic sale list are hotels of the India Tourism Development Corporation. Though the government would like to exit loss-making public sector entities, valuation remains an issue.

Simultaneously, the Finance Ministry plans to revive the Disinvestment Commission that would work as a permanent body under the Cabinet Secretary with key officials of nodal ministries as members. The Department of Disinvestment has readied a proposal on this for the Union Cabinet but the Finance Ministry is putting in additional safeguards.