The Centre is fast running out of equity to divest beyond 51% in the public sector units to shore up revenues via disinvestment proceeds in forthcoming Budgets.

After the current round of disinvestments, the remaining value of Government of India's holdings in public sector enterprises above 51% is no more than ₹1.5 lakh crore – to ₹2 lakh crore, says Department of Investment and Public Asset Management (Dipam) secretary Tuhin Kanta Pandey in an interaction with Fortune India. The Centre has already diluted over ₹3.5 lakh crore of worth PSU stake in the last six years, says Pandey.

"The government stake in the PSEs over 51% could be in the range of ₹1.5 lakh crore to ₹2 lakh crore," says Pandey, adding that the Centre will now follow a 'nuanced approach' to disinvestment to preserve the value of the PSU stock. The value is excluding the government stake in public sector banks where stake sale is yet to begin.

"We have to see that our sum is now limited. We have to keep that value. A nuanced disinvestment like listing is a good option. The point is that we have to improve the PSEs and keep cajoling them towards better performance," Pandey says.

Sharing the quantum of PSU diluted through divestment in the last few years, Pandey said, "Our early pickings are gone. In the last six years, we have done more than 3.5 lakh crore of disinvestment. If you look at the numbers, the remaining government equity beyond 51% is not much. This is excluding the banks."

On public sector banks, Pandey expressed confidence that the banks have turned around. "The government had to put in a lot of capital in the banks. But gradually the view is that the Centre will not further capitalise the banks and they will have to raise the required capital. Banks have now turned around and their non-performing asset levels have improved and they have started raising the equity," Pandey says. In FY21, public sector banks have raised a record ₹58,700 crore from the markets through a mix of debt and equity.

In the current financial year, the government has received disinvestment receipts of ₹12,000 crore against the budget estimate of ₹1,75,000 crore. The revised estimate for the current financial year stands at ₹78,000 crore while the FY23 disinvestment target is ₹65,000.

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