With just over a third of the target of ₹65,000 crore realised in the first six months of this fiscal, it looks like we’re set for a repeat of the same old story once again on the disinvestment front. It may be difficult for the Centre to meet the target this fiscal. In a recent interview to this newspaper, Secretary, Department of Public Asset and Investment, Tuhin Kanta Pandey, said: “We did have substantial disinvestment since 2014... (but) it always leads to lower and lower potential going forward.”

He is also right when he says that the process drags in the case of ‘strategic sale’ as it entails change of management control. Delays arise by way of litigation, questions over valuation of assets and eligibility criteria of bidders — and some of this is perhaps inevitable, as due diligence must be seen to be observed. However, in order to keep the ‘disinvestment’ show going in fits and starts, the Centre has resorted to minority sale of public sector undertakings or more absurdly, transfer of equity from one state-run entity to another.

This amounts to a mundane equity sale to raise some funds for the Budget. It is another matter that the February 2021 policy on New Public Enterprise is clear about its goals. As the Economic Survey 2021-22 notes: “The policy intends to minimise the presence of the Government in the PSEs across all sectors of the economy.” The pursuit of such a goal should be de-linked from meeting budgetary targets.

Indeed, implausible disinvestment targets are often announced to make the budgetary revenues look good. As a result, the average shortfall in realisations vis-à-vis targets between 2014-15 to 2021-22 was 44 per cent, with wide dispersals around this average. Even if one leaves out the Covid period of 2021-22 and 2020-21 when the gap was 55 per cent and 85 per cent, respectively, with respect to targets of ₹1.75 lakh crore and ₹2.10 lakh crore, the underachievement remains high.

This is true even for the period 2008-09 to 2013-14, when the average shortfall was 51 per cent. Between 2014-15 and 2021-22, disinvestment receipts were budgeted at nearly 6 per cent of total receipts on an average (and over 15 per cent of the fiscal deficit in many years), with the figure touching touching 9 per cent or more in FY22 and FY21. This year, it is down to 2.84 per cent, which appears “realistic”.

That said, the significance of sale of minority stake in behemoths such as LIC cannot be brushed aside. This fiscal, ₹24,543 crore has been raised from stake sale in LIC (₹20,516 crore) and ₹3,026 crore from minority stake sale in ONGC. Strategic sales of BPCL, Visvesvaraya Iron and Steel Plant and Central Electronic Ltd have been put off for now, while Pawan Hans remains on the radar.

Rashtriya Ispat Nigam Ltd, BALCO, CONCOR and Hindustan Zinc are strategic sale prospects too this year. However, it is time to move these off the Budget books, like the asset monetisation plan — as both are aimed at maximising return on core assets.

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