For first time in 8 yrs, stake sale proceeds could exceed Budget Estimates. ONGC's acquisition of HPCL alone could get the exchequer more than Rs 30,000 crore.
Illustration: Dominic Xavier/Rediff.com
In the backdrop of expected tax revenue shortfall due to the Goods and Services Tax (GST) implementation and a possible spending stimulus to revive a flagging economy and create jobs, Finance Minister Arun Jaitley will depend on revenue heads like divestment to adhere to the fiscal deficit target for 2017-18.
And, for the first time since 2009-10, it appears stake sale proceeds could exceed the budgeted estimate of Rs 72,500 crore (Rs 725 billion), the highest-ever for any financial year to date.
For April-September, the first six months, the Centre has got Rs 19,759 crore (Rs 197.59 billion).
On tap now is state-owned energy behemoth Oil and Natural Gas Corporation’s (ONGC’s) acquisition of Hindustan Petroleum that could get the exchequer more than Rs 30,000 crore (Rs 300 billion).
Then there are a number of initial public offerings (IPOs) of equity, offers for sale (OFS), a new exchange traded fund (ETF) and planned equity buybacks.
“By our estimate, there might still be a shortfall of Rs 1.1 lakh crore in the revenue receipts… However, the good news is that budgeted disinvestment receipts are on track to realising Rs 72,500 crore.
At current trends, it is likely that for the first time after FY10 that the disinvestment target is likely to be achieved,” State Bank of India’s (SBI’s) Chief Economist, Soumya Kanti Ghosh, wrote in a note to clients recently.
The Centre did an IPO of General Insurance Corporation this month. At Rs 11,300 crore (Rs 113 billion), it was the largest one in seven years.
Planned for this year is the IPO of at least another insurer, New India Assurance, which could fetch Rs 10,000 crore (Rs 100 billion).
The finance ministry’s Department of Investment and Public Asset Management (Dipam) is also working with the defence and rail ministries on a number of market debuts - IRCTC, IRFC, Ircon, Hindustan Aeronautics, Garden Reach Shipbuilders, Bharat Dynamics, and Mazagon Dockyard. For the rest of the year, Dipam is also working on the following OFS proposals, say sources, to offload 10 per cent stake in NHPC, Power Finance Corporation (PFC), and Steel Authority of India; 15 per cent in NLC, five per cent in Rural Electrification Corporation (REC), and three per cent in IndianOil.
In August, it sold a seven per cent stake in NTPC.
Then, there is the Centre’s second ETF, comprising stocks of state-owned companies and private companies in which the government holds a substantial stake.
Named Bharat-22, the new CPSE ETF draws companies from six sectors. Constituents of the basket are National Aluminium, ONGC, IndianOil, Bharat Petroleum, Coal India, SBI, Axis Bank, Bank of Baroda, REC, PFC, Indian Bank, ITC, Larsen & Toubro, Bharat Electricals, Engineers India, NBCC, Power Grid Corporation, NTPC, GAIL, NHPC, NLC, and SJVN.
It is expected to be traded soon.