“This is the first time ever that the disinvestment target has been revised upwards,” said Neeraj Kumar Gupta, Secretary, Department of Investment and Public Asset Management (DIPAM).

A key resource generator for the government in an unusual year, Gupta said that DIPAM has already conducted 27 transactions in 2017-18 raising approximately ₹92,500 crore till now.

In an interview to BusinessLine , a day after the Union Budget, he said the Department will raise the targeted ₹1-lakh crore from stake sales this fiscal but underlines that resource generation is not the only objective of disinvestment. Excerpts:

Finance Minister Arun Jaitley has spoken of strategic disinvestment, particularly Air India in the Union Budget?

Strategic disinvestment has been re-started after a gap of 12 years and it involved learning and inputs from the past experiences and transactions. We also needed time to make it an efficient process. We now have seven cases of strategic disinvestments of PSUs on track where the Expressions of Interest have been invited. The mention of Air India’s privatisation is indicative and not the only one. We have to wait for the notice of its EOI to understand the contours of the transaction. Strategic disinvestment will unlock the true economic value of these PSUs and should not be considered as a tool for generating resources.

Will you elaborate on the proposal of a debt exchange traded fund (ETF)?

Debt ETFs globally are doing very well and grew by 35 per cent in the US in the last one year. In India, the corporate debt market is not very deep or very well developed. In the last three years, only 15 PSUs entered the market to raise ₹3-lakh crore. The trading volume of the PSU bonds is ₹7.5 lakh. The idea with the debt ETF is that we will pool borrowing requirements of PSUs and stagger the fund raising over months. It will be a well defined product at frequent intervals and will raise funds at lower rates for PSUs.

What is the fund of funds mentioned in the Budget?

The fund of fund will be created only to invest in designated ETF funds. It will be treated as an equity investment and will target the nearly six crore active folios in mutual funds.

Why has the disinvestment target been kept at a modest ₹80,000 crore for next fiscal when government has raised nearly ₹1-lakh crore in 2017-18?

The target is a product of Budget making process and the government has set the target keeping in mind the fiscal deficit. At that level, it has estimated disinvestment receipts at ₹80,000 crore.

Will the disinvestment target be impacted if there is a market fall, as is being talked about?

How will the market fall make a difference to the disinvestment plan? It will only impact the offer for sale transactions. Other mechanisms such as exchange traded funds and buyback of shares will continue.

Would you consider the merger of HPCL and ONGC as a disinvestment transaction?

There has been a paradigm shift from disinvestment to investment management and the mandate of our Department has also been reversed. We focus on four strategies now: disinvestment of efficient management of investments, becoming more investor friendly, creating clear policies for dividends and buybacks and lastly, value creation in PSUs for more growth and expansion. It is in the last strategy where we use mergers and acquisitions. So the HPCL and ONGC merger is for value creation.

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